GameStop stock price has moved sideways in the past few months as investors dumped Bitcoin holding companies and its business continued to deteriorate. GME was trading at $22.6 on Friday, down by over 37% from its highest point in July.
GameStop stock stuck ahead of earnings
GME stock price has remained in a tight range in the past few months. This consolidation is expected to end this week as investors react to its earnings, which are scheduled to be released on Tuesday.
These results will provide more color on its business and whether its weaknesses continue. The most recent results showed that the net sales dropped to $734 million in the first quarter from $881 million in the same period last year.
Data compiled by Yahoo Finance shows that the average estimate of 2 analysts is that the second-quarter revenue rose by 3.12% to $823 million. If this is accurate, it will be the first time that GameStop’s revenue has jumped.
These analysts expect that GameStop’s revenue will be $3.52 billion, a 8% drop from 2024. It will then make $3.1 billion in the next financial year, continuing a trend that has been going on for year.
GME’s annual revenue has been in a downward trend in the past few years, moving from $6 billion in 2021 to $5.92 billion, $5.2 billion, and $3.2 billion in the next financial years.
This trend will likely continue in the coming years as people are no longer buying games and consoles in retail shops as they did in the past.
The recent results also showed that the company made a profit of over $44.8 million in the last quarter. Analysts see the profitability trend to continue, with the upcoming results expected to show that its earnings per share (EPS) rose to 16 cents from $0.01 in the same period last year. The annual EPS will grow to 73 cents.
Solid balance sheet
While GameStop’s business is in trouble, its main advantage is that it boasts one of the best balance sheets in the retail industry. It ended the last quarter with $6.3 billion in cash and short-term investments and $7.1 billion in current asset, against $1.4 billion in long-term debt.
GameStop has also invested in Bitcoin and is now the 20th biggest holder with 4,710 coins currently worth over $527 million. This valuation will likely continue growing if Bitcoin price continues rising.
GameStop is also one of the most shorted companies in the United States with a short interest of 15%. This means that strong results may lead to a short squeeze. Besides, its volume remains strong at 11.18 million a day.
Read more: GameStop stock: Time to embrace the MicroStrategy approach?
GME stock price technical analysis
The daily timeframe chart shows that the GME stock price has moved sideways in the past few weeks. It has remained between $21 and the resistance at $24.5 in the same period.
As a result, the spread of the three lines of the three lines of the Bollinger Bands has narrowed substantially, which may lead to a substantial squeeze.
GameStop stock price is also in the accumulation stage of the Murrey Math Lines tool. Therefore, the stock will likely have a short squeeze when it publishes its financial results this week.
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