Why GameStop Stock Is Down By 9% Today

GameStop Stock Dives After Q2 Earnings Report

Shares of GameStop found themselves under strong pressure after the company released its second-quarter report. GameStop reported revenue of $1.18 billion and GAAP loss of $0.85 per share, beating analyst estimates on revenue and missing them on earnings.

The company finished the second quarter with $1.72 billion of cash on the balance sheet which was boosted by the proceeds from its June at-the-market program. The company raised about $1.1 billion in net proceeds after selling 5 million shares of its common stock.

Once again, GameStop did not take questions from analysts during its earnings call. This is a bearish catalyst for the stock as it shows that the company’s management is not ready to take questions on valuation and GameStop’s plans to return to profitability.

What’s Next For GameStop Stock?

Analysts expect that GameStop will report a loss of $0.56 per share in the current year and a loss of $0.03 per share in the next year. It should be noted that analyst estimates have been trending lower in recent weeks, but it is not clear whether it had any impact on the stock which remains dependent on market mood towards “meme stocks”.

The company’s valuation remains detached from the fundamental reality. The recent rally, which happened at the end of August and took the stock from the $160 level to the $225 level, was not as strong as the previous rallies in March or late May which suggests that the stock failed to get enough attention from retail traders.

That said, the stock needs more sellers to gain downside momentum. It remains to be seen whether such sellers will emerge in the upcoming trading sessions as some retail traders are determined to hold the “meme” stock while short-sellers have been burned several times in violent short-squeeze moves.

For a look at all of today’s economic events, check out our economic calendar.

Preview: What to Expect From GameStop’s Q2 Earnings on Wednesday

The world’s largest multichannel video game retailer GameStop is expected to report its fiscal second-quarter loss of -$0.67 per share, an improvement from a loss of -$1.40 per share seen in the same period a year ago.

The Grapevine, Texas-based company would post year-over-year revenue growth of about 20% year-on-year to around $1.1 billion. EPS estimates have been exceeded twice in the last four quarters.

GameStop Corp. will report second-quarter fiscal 2021 earnings results after the market closes on Wednesday, September 8, 2021. GameStop shares have surged over 975% so far this year. The stock closed 5.04% lower at $202.75 on Friday.

The U.S. financial markets will be closed for Labor Day on Monday, September 6.

Analyst Comments

“Caught in meme-frenzy, GameStop has soared and outperformed the industry year to date. The company has been undertaking efforts to fast-track growth, mainly in the digital arena. To accelerate transformation, the company has resorted to board as well as capital restructuring. In this context, the company concluded selling 5 million shares in its last at-the-market equity offering program, and generated net proceeds worth as much as $1.13 billion,” noted analysts at ZACKS Research.

“Moreover, during first-quarter fiscal 2021, the company undertook steps to eliminate long term debt. Speaking of performance, the company witnessed significant improvement in the topline. It gained from sales growth across hardware, accessories and collectibles categories. Management highlighted that second-quarter sales trend continue to reflect growth, with total sales in May rising 27% year over year.”

GameStop Stock Price Forecast

Six analysts who offered stock ratings for GameStop in the last three months forecast the average price in 12 months of $88.33 with a high forecast of $190.00 and a low forecast of $25.00.

The average price target represents a -56.43% change from the last price of $202.75. From those six analysts, one rated “Buy”, two rated “Hold” while three rated “Sell”, according to Tipranks.

GameStop shares were rated “sell” by Credit Suisse Group in April. GameStop shares were raised by Wedbush to $50.00 in June from $39.00, and the firm assigned it an “underperform” rating.

GameStop’s shares were rated a “sell” by Ascendiant Capital Markets it released its July research note. Lastly, in June, Zacks Investment Research lowered its rating for GameStop from a “buy” to a “hold” and set a price target of $231.00.

Check out FX Empire’s earnings calendar

The Biggest Risk To Economic Growth. Should You Still Buy The Dip?

In fact, the all-time record for new highs in one year is 77, set in 1995. Trend watchers note that 2021 is only the 11th time since 1928 that the S&P 500 has rallied +20% or more during the first 8 months of the year. In all but the two big market crash years of 1929 and 1987, the S&P 500 managed to hold a solid double-digit gain into year-end, according to Bank of America research.

Bears vs bulls

Bears, however, are quick to point out that the S&P 500 hasn’t had a pullback of at least -5% or more during the entire climb higher this year, something that generally happens about three times a year. Typically, corrections of -5% to -10% are considered healthy. Bears of course believe stocks are wildly overvalued due in large part to the Federal Reserve’s monetary supports and “easy money”. Once the Fed starts reducing its asset purchases and lifting interest rates, bears believe investors will take a more “risk off” attitude and the bull rally in stock markets will correct to some degree.

Overall, bulls seem comfortable with the Fed beginning its asset purchase “taper” later this year and that is partially due to Fed Chair Jerome Powell’s insistence that the economy “still has much ground to cover” before rate hikes are on the table. Bulls are also anticipating a second shot at a “reopening boom” after the current wave of coronavirus has passed. Remember, this wave cut short the Covid-free summer spending surge that everyone had been anticipating so bulls believe this pent-up demand is going to be spent in the quarters ahead.

What to watch?

The biggest risk to economic growth right now is not on the demand side but rather on the supply side as shortages for everything across the board are limiting the amount of goods and services available. Demand amid the summer Covid surge has cooled a bit, which may be a good thing in the long run as it’s given some manufacturers a minute to catch up. And again, bulls believe this is creating just another layer of pent up demand that consumers will satisfy down the road.

Turning to next week, remember that U.S. stock, bond, and commodity markets are closed on Monday, September 6 for the Labor Day holiday. The short week will also be light on data with just the Fed’s Beige Book and July Consumer Credit on Wednesday, and the Producer Price Index on Friday. Next week’s earnings will include Casey’s General Store, Lululemon, GameStop, Oracle, Z-Scaler, Academy Sports, and Kroger to name a few.

SP500 analysis

Sp500 rallied despite weak NFP. There is only one reason for such reaction – the Federal Reserve still cannot move to tighten monetary policy. However, the Cycles forecast the best buying dip opportunity in October if other conditions will be there. We certainly can’t judge now if it is going to be conformed by other tools.

sp500 cycles september 2021

We have bearish ADL divergence on a daily chart and potentially it will play well and create a buying opportunity in October. However, I have to say there is still good accumulation in this market. So, I believe if this market gives a sell signal in September, traders should cash out their positions quite quickly. We are in a strong bull trend and so far all fundamentals still support the stock market.

ES ##-## (Daily) 2021_09_06 (2_51_28 AM)

Weekly Earnings Preview: GameStop, Lululemon Athletica, Oracle and Kroger in Focus

Earnings Calendar For The Week Of September 6

Monday (September 6)

Ticker Company EPS Forecast
DPH Dechra Pharma £47.90
SMAR Smartsheet Inc. -$0.13
SUMO Sumo -$0.14

Tuesday (September 7)

Ticker Company EPS Forecast
CASY Casey’s General Stores $2.99

Wednesday (September 8)

IN THE SPOTLIGHT: GAMESTOP, LULULEMON ATHLETICA

GAMESTOP: The world’s largest multichannel video game retailer is expected to report its fiscal second-quarter loss of -$0.67 per share, an improvement from a loss of -$1.40 per share seen in the same period a year ago.

The Grapevine, Texas-based company would post year-over-year revenue growth of about 20% year-on-year to around $1.1 billion. EPS estimates have been exceeded twice in the last four quarters.

LULULEMON ATHLETICA: The Vancouver-based retailer healthy lifestyle-inspired athletic retailer is expected to report its fiscal second-quarter earnings of $1.18 per share, which represents year-over-year growth of about 60% from $0.74 per share seen in the same period a year ago. The apparel retailer would post year-over-year sales growth of about 50% to $1.34 billion.

Lululemon Athletica (LULU) is a LT topline grower, supported by compelling secular tailwinds (e.g., performance/athleisure focus), a market share gain opportunity, & credible future revenue driver (e.g., international expansion, digital growth, & product innovation/expansion into new categories). The company’s recent MIRROR acquisition offers both revenue & profitability upside, as reflected in our bull case,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

LULU dominates the NA athletic yoga apparel category due to its unique brand positioning & fashionable products. Covid accelerated consumers health & wellness focus & fashion casualization, both of which should benefit LULU.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE SEPTEMBER 8

Ticker Company EPS Forecast
DNLM Dunelm Group £3.00
KFY Korn Ferry International $1.07
CPRT Copart $0.91
GME GameStop -$0.67
RH Restoration Hardware $6.48
ABM ABM Industries $0.81
AVAV AeroVironment -$0.24
LULU Lululemon Athletica $1.18

Thursday (September 9)

IN THE SPOTLIGHT: ORACLE

The world’s largest database management company is expected to report its fiscal first-quarter earnings of $0.97 per share, which represents year-over-year growth of over 4% from $0.93 per share seen in the same period a year ago. The Austin, Texas-based computer technology corporation would post revenue of $9.8 billion.

Oracle‘s current low valuation at ~16.7x CY22e EPS reflects its slower growth rate compared to peers. Despite potential opportunities within existing database customers and cloud-based ERP applications, offsets from waning businesses mean 2021 likely lacks the catalysts for the positive inflection in revenue growth investors would need to see to drive multiples higher,” noted Keith Weiss, equity analyst at Morgan Stanley.

“With management guiding to mid-single-digit CC revenue growth in a software sector filled with strong secular growth stories, and operating margins declining in FY22 due to heightened investment in Cloud, we remain Equal-weight while our price target moves up to $77.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE SEPTEMBER 9

Ticker Company EPS Forecast
MRW Morrison Supermarkets £5.77
ASO Avesoro Resources $1.38
VRNT Verint Systems $0.42
FIZZ National Beverage $0.52

Friday (September 10)

IN THE SPOTLIGHT: KROGER

Kroger, one of the world’s largest food retailers, is expected to report its fiscal second-quarter earnings of $0.64 per share, which represents a year-over-year decline of over 12% from $0.73 per share seen in the same period a year ago.

The retailer, which operates over 2,500 supermarkets in the U.S., would post revenue of 30.4 billion, down about -0.3% year on year. However, it is worth noting that in the last four quarters, on average, the company has beaten earnings estimates over 21%.

Is Support.com The Next GameStop? Shares Rallies By Over 50% Thanks To Meme Traders

The shares of Support.com are up by more than 50% today as meme traders flock to the software company.

Support.com Rally By Over 50%

Over the past year, Reddit investors have pumped the stock prices of a few companies, most famously GameStop. The GameStop frenzy affected the stock market towards the end of last year and early this year.

The Reddit investors are not done and have picked up another stock to pump. This time around, it is Support.com. The company is known for providing technical support, and it is a small-cap stock. However, Reddit investors have focused their attention on the stock for the past two weeks, and it has now recorded its eighth-straight day of gains.

SPRT surged by more than 50% over the past few hours, becoming the best performing stock in the market. At the time of writing, SPRT is trading close to the $40 mark, after starting the day trading close to $30 per share.

SPRT stock chart. Source: FXEMPIRE

Over the past seven days, SPRT’s price is up by more than 220%, outperforming every other company in the US stock market. Year-to-date, its performance has also been impressive. SPRT began the year trading at $2.20 per share but has seen its price rally over 1,000% since then.

S3 Partners revealed that at the moment, around 60% of the company’s shares are sold short. This figure is huge considering the fact that stocks in the United States market have around 5% of shares are sold short.

Support.com’s Rally Mimics GameStop and AMC

Support.com’s rally is similar to the ones experienced by GameStop and AMC earlier this year. The shares of GameStop rallied earlier this year, thanks to the coordinated trading on the social media platform WallStreetBets. However, the rally ended in losses for some investors and traders, especially the short-sellers.

During the rally of a stock, short-sellers are forced to repurchase shares so they can limit their losses. This short covering ultimately boosts the stock’s price even higher. The rally was also experienced by AMC a few weeks ago.

Why GameStop Stock Rallies Again

GameStop Shares Move Above $200 As Traders Remain Interested In “Meme” Stocks

Shares of GameStop have recently gained strong upside momentum and managed to get from $165 to $225 in just two trading sessions.

There is no clear catalyst for the move, but the stock continues to enjoy strong interest on WallStreetBets, and it looks that the recent upside move was triggered by interest from retail traders.

The previous rally took place back in late May – early June, and the stock made an attempt to settle above $345. However, GameStop stock lost momentum and moved towards the $145 level at the beginning of August before rebounding towards the $225 level.

What’s Next For GameStop Stock?

Analysts expect that GameStop will report a loss of $0.56 per share this year and a loss of $0.03 per share in the next year, so the analyst community remains skeptical about the company’s ability to get back to profitability in the near future.

However, the company’s stock has become a playground for individual traders and hedge funds after it became a “meme” stock back in early January, so the stock’s trading dynamics depend on traders’ interest rather than on the company’s financial performance.

Another “meme” stock, AMC Entertainment Holdings, also rallied in recent trading sessions, which indicates that interest in the “meme” stock topic is very much alive.

In this light, GameStop shares may have a good chance to gain additional upside momentum in the upcoming trading sessions in case they get more support in social media while individual traders and hedge funds bet that the current rally will be as strong as rallies that we’ve seen in March and early June.

However, traders should keep in mind that GameStop’s market capitalization remains detached from fundamental reality, and the stock often drops fast when the initial wave of interest from traders gets weaker.

For a look at all of today’s economic events, check out our economic calendar.

Gold-GameStop Connection? It’s an Emotions Game

Given today’s pre-market slide in gold, it seems that the triangle-vertex-based turning point worked once again. Declines are likely next.

In yesterday’s analysis, I explained why the situation remains very similar to what happened in 2013, and that remains up-to-date. On top of that, two interesting things happened yesterday: one quite obvious and one less obvious.

White Metal Outperformance

The more obvious one was that silver outperformed gold on a short-term basis.

While miners and gold were almost flat yesterday, silver’s daily upswing was notable. Nothing to write home about, but it was visibly bigger than what we saw in gold and miners. These moments – when silver outperforms on a very short-term basis – tend to take place right before the prices of the precious metals and mining stocks decline.

Remember the early-August breakout in silver that turned out to be a fakeout? Silver broke above new highs while gold didn’t, so it outperformed on a very short-term basis. And just as lower prices followed then, lower prices are likely to follow soon (not necessarily immediately, though).

Have You Heard About GameStop?

The less obvious indication of a turnaround in gold came from the… GameStop stock price.

Yesterday’s sizable price spike is something that we saw several times this year. I’m not taking into account the January rally, as it was a specific forum-activity-based upswing that seems to be of one-of-a-kind nature. Except for yesterday’s price spike, there were also four other similar spikes. Let’s check if there was any kind of regularity on the gold market at the same time.

It turns out that in all four cases when the GameStop stock price spiked, gold was topping. Does it make any sense, and can one, therefore, count on this being repeated?

Actually, it does make sense. The assets are not really directly related, but they are related in terms of people’s emotions. The GameStop trade was quite an emotional one, people were jumping on board based on fear of missing out regardless of anything else. And nothing really changed since that time. The current valuations of the stock seem to be based on the same emotional aspect along with people’s ability to finance the purchases, perhaps based on leveraged stimulus-based funds. Consequently, the price spikes in GameStop might be a barometer for a specific type of emotionally driven purchases. And if the market is emotional in one specific way, it could impact more (all?) assets in one way or another. In the case of gold, it seems that when emotions (as indicated by GameStop stock) spiked, gold was topping.

Actually, it could be the case that the reason why silver outperforms gold on a short-term basis is related to the above. Silver is a smaller market, and it’s much more popular among individual investors than among institutions. No wonder that emotions play a part here, as the former are generally more emotional than the latter.

Having said that, let’s take a look at gold.

The yellow metal moved lower today, close to its triangle-vertex-based reversal. Consequently, the top might be in based on just that indication, and there are plenty more coming from other markets.

The USD Index, for example.

The Dollar’s Behavior

Yesterday, I commented on the above chart in the following way:

The USD Index invalidated the breakout to new 2021 highs, but it didn’t invalidate the previous inverse head-and-shoulders pattern, so the downside seems very limited.

There’s a rising short-term support line based on the June and July lows that currently “says” that the USD Index is unlikely to fall below ~92.75. At the moment of writing these words, the USD Index is trading at about 93.07, so it’s very close to above-mentioned level.

And even if the USDX declines below it, there’s support at about 92.5 provided by the neck level of the previously confirmed inverse head-and-shoulders pattern. This means that the USDX is unlikely to decline below this level, and this in turn means that the downside seems to be limited to about 0.6 index point. That’s not a lot.

Remember when the USD Index previously invalidated the breakout above the inverse H&S pattern? I wrote then that it could decline to the nearest support level provided – then – by the 38.2% Fibonacci retracement. Now the nearest support is provided by the rising support line at about 92.75.

This doesn’t mean that gold will necessarily rally from here or that the rally will be substantial. On the lower part of the above chart, you can see that gold moved to its declining resistance line, which means that it could decline right away.

The USD Index didn’t move to the above-mentioned rising support line, but it was very close to it. The USD Index has been relatively flat so far today, but gold is already down, so it seems that even if the USD Index bottoms slightly lower, it might not take gold to new short-term highs.

All in all, it seems that the precious metals sector is ready for another sizable decline.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

For a look at all of today’s economic events, check out our economic calendar.

Przemyslaw Radomski, CFA 
Founder, Editor-in-chief
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Today’s Market Wrap Up and a Glimpse Into Wednesday

Stocks extended their gains on Tuesday, with the S&P 500 and Nasdaq finding their way back to record ground. The Nasdaq is now hovering above the 15K threshold. The Dow Jones Industrial Average also finished the day in the green. The S&P 500 is up about 19% year-to-date.

Investors are feeling optimistic now that the FDA has formally approved Pfizer’s COVID-19 vaccine. If a greater percentage of the U.S. population gets vaccinated, it would likely bode well for the economy.  Plus the spread of the delta variant is beginning to show signs of weakening.

Wall Street expects the bulls to stay in control for the rest of the year. Wells Fargo strategist Chris Harvey raised his S&P 500 year-end forecast from 3,850 to 4,825, according to CNBC.

The oil price was also higher on the day, rising more than 3% to hover above the USD 71 threshold once again.

Stocks to Watch

  • Shares of electronics retailer Best Buy soared 8% on the day after the company’s top and bottom-line results surpassed Wall Street estimates. The company also lifted its full-year revenue forecast amid strengthening demand for its products and a return to in-store shopping.
  • Cybersecurity firm Crowdstrike Holdings saw its shares climb 8% higher after the stock made its way onto the Nasdaq 100 index.
  • Shares of Shanghai-based e-commerce giant JD.com skyrocketed 14% higher on Tuesday on the heels of a 26% jump in Q2 sales to USD 39 billion. The company expects to get through the Chinese government’s tech crackdown unscathed, unlike its competitor Alibaba, whose revenues took a hit as a result.
  • GameStop saw its value balloon by more than one-quarter on the day on solid volume as retail investors made bullish bets.
  • Shares of clothing retailer Urban Outfitters fell 5% in after-hours trading even though the company’s Q2 earnings and revenue results beat analysts’ estimates.

Look Ahead

Durable goods orders for the month of July will be released on Wednesday. Wells Fargo economists predict that there was a decline of 1.2% amid “a slowing in transportation orders.” Excluding transportation, they forecast a modest increase of 0.5%.

All eyes are on the Fed’s upcoming Jackson Hole economic summit on Friday, the theme of which is “Macroeconomic Policy in an Uneven Economy” and which will be held virtually this year.

AMC Chief Braces for Questions on Dividend and Debt

AMC Entertainment CEO Adam Aron has given his shareholders more skin in the game. Aron has paved the way for retail investors to ask questions during the Q2 2021 earnings webcast, which will be a first for the company. The popular CEO has already begun to vet some of the questions, saying that they are “really smart” and calling the ideas that have been presented fascinating.

Individual Investors Want to Know

Nearly 4,200 questions have poured into the Say app from retail investors so far. Among the most popular questions is whether AMC will resume rewarding shareholders with a dividend, which it stopped doing at the start of the pandemic year. The question has received more than 32K upvotes and the most “shares” of any question. In February 2020, AMC announced a dividend of USD 0.03 per share and hasn’t paid a dividend since then. That compared to a distribution of USD 0.20 per share in early 2019.

Source: AMC

Another popular question is whether a potential AMC/GameStop partnership could be in the works. This shareholder is looking for “theatre experiences via local and national gaming competitions.”

AMC and GameStop are two of the early meme stocks and have gained popularity among retail investors this year. Investors in both stocks have taken it on the chin in recent months as shares have been under pressure. AMC is down a steep 10% today ahead of the company’s earnings call on Aug. 9.

Something else that is on the minds of AMC investors is COVID, especially given the emergence of the delta variant. One investor suggests that the company consider going back in time to offering drive-in movie theaters, and at the very least they want to know how AMC would respond to another lockdown.

Debt Load

AMC is saddled with a heavy debt load on its balance sheet. Investors want to know how the movie chain will slash its debt without selling new shares. The company recently attempted to raise capital by issuing 25 million new shares but reversed course on the heels of investor backlash.

As of the end of Q1, AMC’s long-term debt stood at USD 5.5 billion. The company has said it plans to pare down its debt with the cash that it has raised. But it won’t be by selling new shares, at least not before 2022.

Another company that is welcoming questions from shareholders is cryptocurrency exchange Coinbase, whose earnings call is planned for Aug. 10.

Robinhood Markets Snubbed by Investors on Nasdaq Debut

Commission-free trading app Robinhood is officially a publicly traded company, but investors did not roll out the welcome mat for the stock. Shares of Robinhood, which trade under the symbol “HOOD,” opened at USD 38 per share on the Nasdaq before falling to around USD 33. The new stock managed to recover some of those losses and is down 5% at the last check, which is better than the close to 10% declines it suffered earlier in the session.

Source: TradingView

Isn’t It Ironic?

There has been a great deal of hype surrounding the Robinhood app, for several reasons, chief among which was its decision to earmark shares for its users. Robinhood pledged more than one-third of its float for customers of the trading app, which is on the generous side. A typical IPO will reserve less than 10% for retail investors as hedge funds and other big investors tend to get first dibs.

Individual investors have seemingly not returned the favor to Robinhood, leaving the mobile trading app hanging on its stock market debut. It could have gone either way. Robinhood was hoping to mend the fences between itself and jilted retail investors who were left holding the bag after the broker placed trading restrictions on popular meme stocks, including GameStop and AMC Entertainment.

The massive buying in GME And AMC by the Reddit WallStreetBets crowd in early 2021 pressured short-sellers, mainly hedge funds, and Robinhood caved to the pressure. The broker has since lifted those trading restrictions. Apparently, all is not well that ends well, however, if Robinhood’s stock price on day one is any indication. Social media members couldn’t resist the irony of the situation.

Celebrity Backers

Robinhood is kicking off its future as a public company with a market cap of USD 34 billion. A couple of astute backers who timed it right are Nas and Snoop Dogg, who invested in the trading app in 2014 when the company had a value of USD 62 million attached.

NBA champion Kevin Durant and his manager Rich Kleiman are probably not complaining either. They placed a bet four years ago through Thirty Five Ventures, the VC firm Drant and Kleiman co-founded.

Their return on Robinhood is reportedly in the ballpark of 2,500%.

GameStop Does Some Rebranding, Gains Twitter Nod

GameStop apparently has no use for the popular phrase, ‘if it ain’t broke, don’t fix it.’ The gaming retailer is making changes, including the rebranding of its EB Games segment in Canada. The company’s EB Games locations throughout Canada as well as its e-commerce store will be operating under the GameStop name by the end of the year. GameStop’s Canadian rebranding comes in response to feedback from its customers and investors.

The move is being met with mixed reactions on social media. Some users are questioning the use of the company’s resources to make the change, while others are saying it took them long enough. One thing that people seem to agree on is that if GameStop wants to remain relevant, it is going to have to transform itself into a digital-focused company. That is precisely what GameStop is trying to do.

Digital Push

GameStop is getting a boost from social media giant Twitter. According to reports, Twitter is including GameStop in a group of companies that will be permitted to make a product push on their account page as Jack Dorsey’s company similarly looks to broaden its reach.

GameStop is one of 12 companies that will be able to spotlight nearly half a dozen products on its Twitter profile page. Reminiscent of the Tinder dating app, there will be a “swiping” capability as well as the opportunity to be brought to GameStop’s e-commerce site to complete a sale.

This program, which is dubbed Shop Module, could go a long way for GameStop’s desire to be part of the digital pack, which is where all of the gaming companies reside. For its part, Twitter won’t become an e-commerce site in the true sense of the word, as it won’t actually be processing any of the transactions or taking a piece of the sales pie.

Cruel Summer

Twitter’s stock is higher on the day, but GameStop is trading in the doldrums. GameStop’s stock is down more than 5% today and has fallen below the USD 170 level. In early June, GameStop shares were trading at more than USD 300 but it has been a cruel summer for meme-stock investors.

Meanwhile, GameStop has muscled its way into the S&P 400 midcap index, effective early August. GameStop’s market cap currently hovers at USD 12.6 billion.

GameStop to Rebrand EB Games in Canada by Year-End

Grapevine, Texas-based GameStop had acquired EB Games’ owner Electronic Boutique Holdings Corp in 2005 for more than $1 billion.

EB has about 4,000 stores across Canada, with operations in Australia, New Zealand, and countries across Europe, according to its LinkedIn page https://bit.ly/3iOKO7a.

“This decision follows our receipt of feedback from our valued customers and stockholders,” GameStop said.

The company has been looking to shift its focus from brick-and-mortar sales and accelerate its e-commerce push. Its largest shareholder, Ryan Cohen, joined its board in January and became chairman last month with a plan to revive stores and boost online sales.

Separately, S&P Dow Jones Indices said on Tuesday that GameStop — one of the hottest and most visible “meme stocks” — will join the S&P MidCap 400 index next week

(Reporting by Eva Mathews in Bengaluru; editing by Uttaresh.V)

Stock Futures Tread Lightly Ahead of Monday’s Trading

Stocks ended last week on a sour note after the Dow Jones Industrial Average tumbled close to 300 points to slip further below the 35,000 threshold. The S&P 500 and tech-heavy Nasdaq also finished Friday in the red. For the week, all three major indices lost ground after advancing for three straight weeks.

Retail sales climbed a higher than expected 0.6% last month vs. May, but investors chose to see the glass half empty and turned their attention toward inflation once again. Consumers are beginning to feel the effects of rising prices on real estate, cars and durable goods, according to the University of Michigan’s consumer sentiment index, which fell to 80.8 in the first half of July from June’s 85.5.

Stock index futures were not showing any clear direction on Sunday evening. Dow Jones Industrial Average futures were unchanged, while S&P 500 and Nasdaq futures were slightly positive. Economists cited by The Wall Street Journal believe economic growth saw its best days in the second quarter and will begin to ease. Nonetheless, the economy will keep expanding in 2022, economists say.

Stocks to Watch

Meme stocks were a mixed bag on Friday. AMC Entertainment shed nearly 3% while GameStop hit a stride and gained slightly more than 1% after five consecutive days of declines. GameStop has a new competitor after streaming giant Netflix made a key hire to muscle its way into the video game fray.

In the oil patch, OPEC+ has decided to bolster production for the next couple of years amid strengthening demand in a post-COVID-19 economy. The barrels of oil will be added on an incremental basis until the end of next year. Oil prices including WTI and Brent crude have retreated approximately 5% as the likelihood of an agreement between OPEC and its allies increased.

Look Ahead

Existing home sales for June come out on Thursday at 10 a.m. ET. Wells Fargo economists predict that they climbed higher to 6.06 million units vs. 5.8 million units for May.

As the earnings parade rolls on, technology companies are the next in line. IBM is in the pipeline for Monday. Wall Street has high expectations given that Big Blue is up against numbers from last year’s pandemic-fueled economic slowdown.

In addition, investors will be watching to see the results out of the transportation sector, which tends to serve as a gauge of the economy. J.B. Hunt Transport Services will report earnings after the market closes.

Today’s Market Wrap Up and a Glimpse Into Thursday

Stocks finished the day mixed as comments out of Federal Reserve Chairman Jerome Powell resonated with investors. The Dow Jones Industrial Average and the S&P 500 finishing with gains while the Nasdaq extended its recent declines. Powell told lawmakers he expects inflation will calm down while monetary policy should remain intact.

Bank of America flexed its muscle with a more than doubling of profits in the second quarter. Investors, however, focused on falling revenue and punished the stock, sending shares lower by 2.5%.

Stock index futures are treading lightly on Wednesday evening as investors brace for another round of jobs data coupled with the continuation of the Q2 earnings parade.

Stocks to Watch

Netflix is trading 2% higher in the after-hours market. The company has snagged a seasoned video game executive for its gaming venture. Netflix hired Facebook’s VP of augmented reality, Mike Verdu, as it looks to take share in the gaming space. Verdu also held stints at Electronic Arts and Zynga.

Meme stocks were under pressure today, with shares of AMC Entertainment tumbling 15% in the regular session. The declines continued in extended-hours trading. The selling pressure also spilled over into GameStop, which could be feeling the heat from Netflix’s gaming push.

There could be some M&A news coming up. Cybersafety company NortonLifeLock announced it could be combining with British cybersecurity play Avast. Shares of NortonLifeLock came under pressure on the development and are down more than 2% in extended-hours trading.

Look Ahead

Investors will be looking to see if stocks return to their record levels on Thursday or continue to trade cautiously amid an uncertain inflationary outlook. On the earnings front, banks will continue to report their results including Morgan Stanley.

Economic data could also influence the direction of stocks. Industrial production for June is expected at 9:15 a.m. ET. Wells Fargo economists described manufacturing demand as “robust.” While input costs are high and supply chain constraints are an issue, the economists are predicting a 0.8% increase for June.

In addition, unemployment claims come out on Thursday. Consensus estimates call for a decline in the number of claims to levels not seen since before the pandemic reared its head.

GameStop Investors Speculate on Meme Stock’s NFT Launch

Meme-stock and cryptocurrency investors alike are speculating on Twitter about whether today is the day that the company will introduce a non-fungible token, or NFT. Non-fungible tokens are digital assets that integrate some object, such as a piece of artwork, video, or anything that the creator can imagine, including a game apparently.

Based on the source code of a GameStop blockchain contract, July 14 had emerged as the speculative launch date for the NFT. That theory is losing its luster, however, as the clock continues to tick. That doesn’t mean that a GameStop NFT isn’t in the works.

A GameStop NFT website has already been launched, fueling the speculation that the unveiling of the gaming token is not too far behind. Plus the company recently brought on Matthew Finestone as head of blockchain.

Investors are anxiously awaiting the details of what the digital token will have to offer and have begun to unpack the coding tied to a cryptocurrency wallet address for clues. Solidity developer and Twitter account @0xfoobar is reportedly behind the GameStop blockchain contract and has seemingly been busy building the NFT. The GameStop team has been keeping the details of a gaming NFT close to the vest, but the launch could be tied to the Ethereum network upgrade.

Source: Twitter

Gaming and NFTs

Gaming is a natural fit for NFTs, given that gamers are already accustomed to buying in-game virtual assets like skins, currency and more to up the ante. The most popular NFTs have been known to sell for tens of millions of dollars. A GameStop NFT could generate some excitement both in the blockchain industry and among traditional gamers, which has the potential to spill over into the stock to give it a much-needed jolt.

GameStop, the meme stock that started it all, has seen its value decline by close to 20% in the month of July so far. Year-to-date, shares of GameStop have gained more than 800%.  Short interest in the stock hovers at 13.3% and has increased more than 9% in recent days, as per S3 Partners data cited by CNBC.

Meme Stock Malaise 

July is almost halfway over and meme stock investors are licking their wounds after a bout of declines. Based on the activity on Reddit and other social media platforms, retail investors are holding, for the most part, and waiting for their fortunes to turn around. They are also getting tired of seeing red day after day as their strategy to squeeze sophisticated traders hits a bump in the road.

The major meme stocks are still up for the year and have outperformed the broader markets, but they have tumbled in recent weeks. Some are blaming it on the rise of inflation rather than anything company-specific in their favorite stocks. Either way, the bears appear to be in control for the time being as trading volumes weaken and the summer doldrums kick in. It is nothing a GameStop NFT could potentially fix, but when that will become a reality is the question.

 

GameStop Stuck at Current Level as Investors Hunt Bottom

GameStop shares have put investors through the wringer of late, with the stock having shaved off more than one-third of its value since early June. Trading volume is lighter than usual, suggesting that the downturn could have something to do with the summer doldrums.

Nonetheless, retail investors are itching for any sign that their favorite meme stock may have finally hit a bottom and is ready for its next upward move.

One Reddit member has posted a technical analysis thread on the forum in which they explain how the technical stars could be aligning for a turnaround in GME. The thread has received more than 500 comments. Investors are responding to the fact that GameStop has “formed a candle combo off of support lines” that is reminiscent of previous set-ups that preceded rallies, according to the thread.

Wall Street Weighs In

The last place that retail investors are looking to for direction is analyst firms. Nonetheless, Wall Street continues to weigh in on the meme stock craze. Most recently, Ascendiant Capital Markets analyst Edward Woo more than doubled his price target on GameStop’s stock.

The analyst’s 12-month target went from USD 10 to USD 25, which for all intents and purposes seems bullish. Considering that GameStop shares are trading at USD 190, however, the upward revision did little to lift the stock.

Super Mario Stays Relevant

The gaming industry has been thrust in the spotlight after an unopened copy of a Super Mario 64 game cartridge was sold at an auction for more than USD 1.5 million, setting a new record. While Nintendo is behind Super Mario, the sale was a boon for all of gaming, including GameStop, which is moving away from nostalgia and into the digital age.

The Super Mario 64 cartridge dates back to 1996. That was four years before GameStop as the world knows the brand today was born. While the gaming retailer’s history began in the 1980s, it went through an evolution of brands before becoming today’s GameStop. Incidentally, the company is on a new journey to transition from a brick-and-mortar to a digital retailer.

Despite the excitement around the game, Super Mario did little to lift the mood of gaming investors.

Today’s Market Wrap Up and a Glimpse Into Thursday

Stocks rebounded as investors breathed a sigh of relief now that the Fed minutes are out, sending all three major indices higher. The S&P 500 reached its latest all-time high to hover above 4,358. The Dow Jones Industrial Average tacked on another 100 points, while the tech-laden Nasdaq closed modestly higher.

Policymakers in their FOMC minutes from the June meeting expressed a need for “patience” before making any changes to the Fed’s asset-buying program. This soothed investors’ fears about any sudden change in monetary policy.

Technology stocks were out front once again, including the likes of Apple and Amazon. For its part, Apple reached a new record high, closing at just above USD 144. In fact, while the S&P 500 has been on a tear, AAPL and AMZN have outperformed the broader index in the short term. Both tech stocks have advanced by double-digit percentages since early June while the S&P has increased just over 3% in the same period. Apple’s market cap is now USD 2.4 trillion.

The oil patch saw more volatility, with the crude oil price falling 1.5%, extending Tuesday’s declines amid stalled production talks involving OPEC+ countries.

Stocks to Watch

Meme stocks continued their downward spiral, with AMC Entertainment feeling the brunt of the selling. The movie chain stock shed almost 10% on the day and is continuing under pressure in after-hours trading. It was not alone, as shares of GameStop extended recent declines and fell by 5%. AMC and GameStop have closed in the red for the past four trading sessions in their worst such stretch since May.

While meme stocks bucked the overall bullish trend, several stocks are continuing the market’s upward momentum in extended-hours trading.

  • WD-40 Company is up by nearly 10% in after-hours trading after its third-quarter earnings results surpassed Wall Street’s estimates. The company also raised its revenue outlook for the full fiscal year amid robust demand for its cleaning products.
  •  GAN Limited is up an eye-popping 17% in extended hours on the heels of its preliminary Q2 results. The gambling company’s revenue was “higher than expected,” as a result of which it bolstered its full-year sales outlook.

Look Ahead

Investors will be looking to see if anything could stop this runaway train that is the markets.

AMC Investors Dig in Their Heels as Stock Tumbles

Meme stock AMC Entertainment may be trading below the USD 50 threshold, but retail investors are keeping their chins up. They vow to hold on for what could be the pinnacle of all short squeezes in which hedge funds are forced to cover their bearish positions by buying shares and potentially sending the stock price soaring.

One widely followed analyst whose Twitter account is BAM Investor predicts that AMC will reach new all-time highs in August. His followers are divided on whether or not to bet on it, with some preferring that he not reveal dates so as not to tip their hand to short-sellers. In the interim, AMC shares remain under pressure and have shed 8% today.

The downtrend in meme stocks including AMC and GameStop started in June. And while both stocks are still up handily for the year, they have been leaving once starry-eyed investors feeling frustrated so far this summer. Both stocks are facing their fourth consecutive day of declines, a trend that hasn’t reared its head since early May.

Short Interest on the Rise

While the AMC stock price has been headed lower, short interest has seemingly been on the rise. Roensch Capital, a securities analysis firm, illustrated in a live update that short interest in AMC has climbed 5% higher today, and rising.

Meanwhile, Roensch also revealed that options traders are looking ahead to next year, as evidenced by more than 3K January 2022 USD 145 call contracts traded. Some of its followers are hoping to see the AMC price “pop sooner than that.”

Blame Game

Retail investors maintain that they are holding and not selling under the pressure. They are also complaining, however, that the stock “is being manipulated down by hedge funds.” Others are suggesting that AMC CEO Adam Aron’s backpedaling on the sale of 25 million shares could be the culprit.

On July 6, The Joe Rogan Experience podcast brought some attention to meme stocks including AMC when co-host Adam Curry addressed stock price manipulation on the show. He described how retail investors called hedge funds out for their shorted shares, particularly with GameStop and AMC, describing how sophisticated traders are now “eating themselves” and the “game is over.”

Today’s Market Wrap Up and a Glimpse Into Wednesday

Stocks interrupted their winning streak as investors took a breather to start the holiday-shortened week on a sour note. The S&P 500 finished slightly lower, while the Dow Jones Industrial Average shed more than 200 points and the tech-heavy Nasdaq managed to eke out some gains.

The S&P ended its seven-day record-close stretch, while the Dow similarly failed to build on its all-time high. There was no single negative event to drag stocks lower, though the ISM’s purchasing managers’ index for June came in slightly weaker than expected.

And even though last week’s employment report showed robust jobs growth, the unemployment rate is still hovering at an alarmingly high 5.9%. Trading was relatively light, suggesting that the summer doldrums might stick around for a while.

Tech was the bright spot, buoyed by Amazon, which bucked the downward trend and raced ahead by nearly 5%. The stock benefited from a decision by the government to shutter a multi-billion-dollar JEDI cloud contract it had with Microsoft, potentially paving the way for Amazon to muscle its way in.

 

Stocks to Watch

Wall Street Bets, the Reddit account that started the meme stock craze, has taken its subreddit away from public view. The popular account has switched the forum to private mode, essentially blocking anybody who has not been approved from viewing or participating in the discussion.

As fate would have it, a couple of meme stocks were punished on Tuesday, chief among which was Clover Health, which shaved nearly 15% off its value. AMC Entertainment shed almost 4%, failing to maintain the gains it achieved after revealing it would nix plans to pursue a sale of 25 million shares.

In true Amazon fashion, GameStop has leased space in Reno, Nev. for a fulfillment center to house its video games and electronic components. The facility, which will be operational next year, will be used to accelerate shipments to West Coast customers. GameStop recently tapped Amazon alum, Matt Furlong, as its CEO, and the company’s digital strategy is beginning to take shape.

Look Ahead

The FOMC meeting minutes will be released on Wednesday afternoon, giving investors the opportunity to see exactly what policymakers are thinking. The Fed has already tipped its hand to upcoming more hawkish monetary policy, and investors are hunting details on when as well as any indication of inflation trends.

AMC Rallies After Company Withdrew Stock Boosting Proposal

The shares of AMC Entertainment rallied today following the company’s announcement that it is withdrawing its plans to issue up to 25 million more shares. The market has responded positively to the news, with AMC one of the best-performing stocks in recent months.

AMC Won’t Issue New Shares

AMC Entertainment announced earlier today that it would no longer be going through with its earlier proposal. The company had previously proposed that it would issue 25 million more shares and intended to submit the proposal in its upcoming annual meeting of stockholders.

However, AMC’s CEO Adam Aron clarified earlier today that the movie theater chain would no longer be submitting the proposal. He said he wanted the shareholders to authorize 25 million more AMC shares. However, since the proposal has been met with a strong rejection, AMC would no longer proceed with it.

AMC stock chart. Source: FXEMPIRE

The news sent AMC’s stock price soaring by over 5% at Tuesday’s pre-trading session. However, the stock has consolidated, and it is up by 1.9% over the past 24 hours. At this time of this report, AMC is trading above $53 per share.

AMC Enjoying A Stellar Year

AMC is one of the best-performing stocks so far this year. Similar to GameStop last year, AMC has been caught up in a trading frenzy amongst retail traders that leverage Reddit to boost their stock picks.

So far, AMC’s stock price is up by 2,350% year to date, causing the company’s market cap to rally past $26 billion. AMC was planning to issue more stocks and raise money to enable it to undertake potential acquisitions. The company had intended to acquire ArcLight and Pacific theater locations that underperformed during the pandemic. AMC also said the extra funds would be allocated to pay down debt, reduce interest costs, or pay off millions in unpaid rent.

AMC has been using stock sales in recent months to raise fresh capital. According to the company, without the additional funds, it would have gone bankrupt by now.