GameStop Stock Heats Up After Another Analyst Takes It On The Ice
started the year with nine analysts covering the stock. Now only three are left with notes after an analyst suspended his target, pointing the finger at social media and other non-fundamental factors that are moving the stock.
Baird’s analyst Colin Sebastian explained the reasoning behind his decision in a note Monday. He told clients he was suspending his neutral rating and $ 25 price target until management details his new business strategy so analysts can better forecast free cash flow generation and assess value. intrinsic.
Sebastian wrote that he recognized that GameStop (ticker: GME) was rapidly shifting from in-store video game sales to e-commerce, but believed that “stock price volatility is more closely related to non-fundamental trading, to e-commerce. influences from social media and other factors. that make it difficult, at least in the short term, to make a reasonable stock rating recommendation for institutional investors.
Shares were up about 3.5% to $ 216.86 at midday. The S&P 500 index remained stable. Also on Monday, the title went to
small cap index
index. The conversion required all Russell 2000 funds to sell the stock and all Russell 1000 funds to buy.
Sebastian’s decision leaves three analysts covering GameStop, according to FactSet. Edward Woo of Ascendiant Capital Markets has a sell rating and a target of $ 10. Jefferies analyst Stephanie Wissink is a Hold’em and $ 190. In between is Wedbush analyst Michael Pachter with an underperformance rating and a target of $ 50.
GameStop’s mad rush began last summer when Chewy co-founder Ryan Cohen revealed a stake in the company. After increasing his stake to around 13% and urging the board to invest more in e-commerce, Cohen joined the board with two other former Chewy executives in January. This news, coupled with huge short-term interest, speculative options activity and a move on social media, helped spark a squeeze that has skyrocketed stocks. Retail investors on social media sites like Reddit are still highly listed and even buy shares of other underprivileged companies like
Since then, GameStop has recruited a new management team, bringing a new GM, COO, CTO and Chief Growth Officer, as well as dozens of other executives with e-commerce experience in different roles. companies such as
The company also sold about $ 1.68 billion of shares at market prices, divested its board of directors, and wiped long-term debt off its balance sheet, except for $ 445 million in lease obligations which are classified as long-term debt for accounting purposes.
Although GameStop underlined the efforts To become the go-to e-commerce platform for gamers, like investing in technology and expanding its product line, analysts were waiting for more details like financial goals.
Cohen, who is now chairman of the board, told shareholders in a June 9 address that his goals for GameStop are to delight customers and generate long-term shareholder value.
“We know some people want us to come up with a detailed plan today, but that’s not going to happen,” Cohen said at the time. “You won’t find us talking about a great game, making a bunch of high promises, or telegraphing our strategy to the competition, that’s the philosophy we’ve adopted at Chewy. “
Write to Connor Smith at [email protected]