GameStop Is Losing Its 'Stimmy' Support, Analyst Says

GameStop Corp. GME shares traded lower by another 5.5% on Friday morning after one analyst said the stock may continue to struggle moving forward.

The GameStop Analyst: Bank of America analyst Curtis Nagle reiterated his Underperform rating and $10 price target for GameStop.

The GameStop Thesis: In his new note to clients, Nagle said spikes in GameStop shares in 2021 have coincided with increases in social media conversations related to stimulus payments on Reddit’s WallStreetBets and elsewhere.

At this point, Nagle said online conversations involving stimulus appear to have peaked, and the latest peak has correlated to the recent decline in GameStop’s share price.

Related Link: Why GameStop Stock Traders Should Beware The 'Law Of Twos And Threes'

Now that stimulus-related buzz will start dying down, Nagel said GameStop’s next major catalyst will be its fourth-quarter earnings report on March 23. Consensus analyst estimates are calling for $1.35 in EPS on $2.21 billion in revenue, up 0.8% from a year ago.

Nagle said he would not be surprised if GameStop falls short of those expectations.

“We expect an underwhelming quarter given previously announced holiday sales results that were very disappointing,” he said Friday.

See also: How‌ ‌to‌ ‌Buy‌ ‌GameStop‌ ‌(GME)‌ ‌Stock‌

Benzinga’s Take: GameStop’s legacy brick-and-mortar business has been declining for years, so the company must come through with some clarity and details related to its turnaround strategy at some point to support the bull thesis. In the meantime, GameStop shares are trading at an enterprise multiple that is roughly four times higher than it was when the company reported peak EBITDA back in 2015.

Photo via BentleyMall on Wikipedia.