GameStop stock price: GME analysis and earnings preview

GameStop (NYSE: GME) stock price has staged a strong comeback recently as investors embrace a risk-on sentiment. The shares jumped to a high of $24.57, the highest level since March 22nd. In all, the GME stock has soared by over 58% from the lowest level this year.

GME earnings preview

GameStop share price will be in the spotlight this week as the company publishes its financial results on June 7th. These results will come at a time when there are concerns about the pace of recovery of the video game industry.

Data published in May showed that US videogame sales dropped for the second straight month in April. In all, sales dropped by 5% to $4.12 billion and by 2% from the same period in 2022. These numbers are important for GameStop since the company focuses on the video game industry.

On a positive side, data showed that hardware sales rose, with PlayStation 5 becoming the best-selling console followed by Nintendo Switch.

Analysts believe that GameStop’s revenue in the second quarter will come in at over $1.38 billion, a decline from the previous quarter’s $2.2 billion. This decline is understandable since the fourth quarter is the biggest period for retailers. The report will be in line with what it made in the same quarter in 2022.

The GME stock will react to the headline figures as well as the company’s profitability. It jumped by more than 50% after it published strong results in March that showed that it made a 16 cents profit per share. 

Unlike other meme stocks, the company also has a strong balance sheet, with over $1.39 billion in cash and short-term investments. It also has no debt apart from a low-interest unsecured term loan that came from France’s response to Covid-19 pandemic.

GameStop stock price forecast

GME chart by TradingView

Turning to the daily chart, we see that the GME share price has made a strong bullish trend in the past few days. In this rebound, the stock is now sitting at an important resistance level at $24.40, the highest level in February. The stock has also moved slightly above the 50-day moving average while the MACD has moved above the neutral point. 

Therefore, there are two possible scenarios to expect when the company publishes its results. First, a move above the key resistance point at $25 will signal that bulls have prevailed and see it jump to $30. On the other hand, a bad report will see it tumble to below $20.