GameStop (NYSE:) shares have seen a 17% increase from their recent low, signaling potential for further upside. But is now the right time to buy this stock? The answer is not clear-cut, as it depends on your risk tolerance and expectations. Investors should stay cautious and watch for upcoming earnings results, which are likely to be volatile and unpredictable.
GameStop’s Q2 Results May Disappoint
Analysts are not optimistic about GameStop’s upcoming earnings report. The consensus forecast expects a 22% decline compared to last year, with no significant improvements in the company’s core segments. The decline in Collectibles sales is particularly concerning, as it was expected to drive growth but has now become a burden for the business.
Little Support from Analysts and High Short-Interest
GameStop lacks sell-side support, with only one analyst firm rating it as a Sell. Institutional activity is not strong enough to drive significant price movements, and short-sellers are likely to reposition if the stock rallies. Short interest has decreased, but it remains a factor to watch in the coming weeks.
Share Count Surge and Potential for Dilution
GameStop has increased its share count by 25% earlier this year to raise capital, and it may do so again if the stock price rises. Despite showing signs of a bottom near $20, the stock faces resistance levels at $27.50, $30, and $40. Traders should be cautious of potential price drops back to the $10 range.
Overall, GameStop’s stock is at a critical juncture, with potential for both gains and losses. Investors should carefully assess their risk tolerance and consider the uncertain market conditions before making any decisions.