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Is it too late to buy GameStop (GME) stock in 2022?

by | Last updated 27 Nov, 2022 | Consumer Discretionary

Key Points

  • GameStop got investors crazy in 2021.
  • The company is being led in a new direction under the new management.
  • Management’s new strategy could fuel a new era of growth for this business.

GameStop (NYSE:GME) is just another American high street shop that sells games, consoles, and other electronics. Yet it became a wall street star when a group of retail investors, under the name wallstreetbets from Reddit, a social media site, artificially pushed the GameStop stock price up by purchasing a huge volume of shares.

A roughly 1,000% increase in a few months got retail investors pretty excited. But can these shares continue to climb higher in 2022? Let’s take a closer look.

GameStop stock performance

GameStop stock peaked at $325 in 2021. Despite the huge drop following the initial spike in price, the shares are doing relatively well. The stock that was trading under $20, before the interference of the Reddit investors is now trading at around $150.

I believe the company officials owe it to the wallstreetbets for this growth of more than 700% in a year.

Will the GameStop stock rise?

No doubt the surface of the GameStop stock is exciting. But what matters more is what’s happening behind the scenes.

In the recent quarter ending January 2022, the company reported an increase in total revenue. On the other hand, high costs led to a net loss of $147.5m. In the face of supply chain and Covid-19 challenges, the firm took a blow of increased costs to maintain its customers.

As per my knowledge, the new management leaders are taking the brick-and-mortar change in a new direction. Not only is the gaming group increasing its focus on digital presence, but it’s also progressing towards new deals and partnerships with PC gaming brands.

These actions taken today could yield lucrative returns very soon. And in my opinion, that will give a huge push to the GameStop stock. price

Roadblocks down the road

GameStop has recently announced plans for a stock split. And the stock market did not take the news positively. The initial gain in price on the next trading day, post announcement, was completely wiped out by the day’s end. Although it’s worth noting that stock splits don’t actually affect the value of a business since it just breaks it up into smaller pieces that are automatically distributed to existing shareholders.

Also, in the future, the company plans to tread in unknown territories of cryptocurrencies and NFTs. Is this new direction a wise move? I guess we have to wait for the management’s plan of action to understand better.

Will I be buying GameStop stock?

As one of the hottest stocks of 2021, GameStop’s stock still keeps investors interested via its plans and shift in the company’s strategy. The massive change in the firm’s business model no doubt seems promising, but it will need its time to show the result.

While I am positive about the growth potential, the volatility of the share price cannot be ignored. Any bumps down the road could seriously impact investors like me. Therefore, till the time the new management gets a good hold over operations and streamlines the business, I will be keeping this business on my watchlist.

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Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.

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