GameStop Surprises with a Comeback Profit

Why It Matters

GameStop (GME) just pulled off a profit turnaround despite shrinking revenues, signaling that the meme stock king might still have some fight left in it. The result? A 10% after-hours pop for a stock already up 54% in 2024.

Zoom Out

GameStop has been a rollercoaster for retail investors since its meme stock fame in 2021. The third-quarter results show progress toward profitability, but questions about its long-term growth persist.

• The retailer reported a $17.4 million profit (4 cents per share) on $860.3 million in revenue, reversing last year’s $3.1 million loss on $1.08 billion in revenue.

• Wall Street remains skeptical. Wedbush analyst Michael Pachter reiterated an “underperform” rating and a $10 price target, citing “insurmountable barriers” to sustainable growth.

• GameStop’s recent surge also got a meme-style boost last week after a cryptic post by Keith Gill (aka "Roaring Kitty") sent shares soaring briefly by 14%.

Deep Dive

• Profitability vs. Shrinking Revenue: The move to profitability reflects cost controls, but a 20% revenue dip raises questions about whether GameStop is managing growth or simply shrinking profitably.

• Meme Momentum Revisited: Social media influencers like Roaring Kitty can still move the needle, but the stock’s rally hinges on more than nostalgia for retail traders.

• Crypto and Emerging Tech: GameStop’s foray into NFTs and Web3 has gone quiet, leaving investors to wonder if these pivots can reignite growth—or if they’re just distractions.

Market Pulse

"GameStop's road to sustained profitability feels like a steep climb. Meme stock energy may ignite rallies, but fundamentals dictate the long game." — Michael Pachter, Wedbush

The Bull’s Take

GameStop’s focus on leaner operations is paying off, and a loyal retail investor base keeps fueling its upside. While challenges remain, any hint of innovation or growth strategy could spark further rallies.

GameStop isn’t for the faint of heart, but for bold investors, the upside potential remains alluring. Keep an eye on momentum shifts and look for buy-in opportunities during pullbacks.