A GameStop stock crash may be brewing – analyst warns

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on May 6, 2024
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  • Wedbush analyst sees downside in GameStop Corp to $5.0.
  • $GME came in shy of Street estimates in its fiscal Q4.
  • GameStop stock has gained over 50% in recent weeks.

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GameStop Corp (NASDAQ: GME) has gained more than 50% in recent weeks but the gain is far from sustainable, as per a Wedbush Securities analyst. 

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GameStop stock could crash to $5.0

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Michael Pachter continues to rate the video game merchandise retail company at “underperform”. His $5.0 price objective suggests about a 60% downside from here. 

He remains super dovish on GameStop stock as it needs more than cost cuts to boost profitability. Pachter even forecasts the firm’s demise by 2029 if its revenue continues to sink at the current pace of up to $200 million. 

In late March, $GME reported its financial results for the fourth quarter that came in shy of Street estimates (find out more).

GameStop shares are currently back at the price at which they started 2024. 

Why has GameStop stock gained recently?

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The recent gain in GameStop stock was mostly related to dovish commentary from the U.S. Federal Reserve and hopes of imminent rate cuts. 

On the flip side, though, there are bigger reasons that call for caution when it comes to investing in $GME. These include CEO Ryan Cohen’s plans of keeping on with investments in cryptocurrencies and blockchain-based stocks as well. 

GameStop stock does not currently pay a dividend. So, that side of its story is not exciting for investors either. 

All in all, as long as the gaming merchandise retailer turns positive on a free cash flow basis, it will remain rather unattractive for fundamental investors. 

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