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79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
First Published date: 25. September, 2022Last Updated: 11. January, 2023Fact-checked by Adrian Müller
The stock market can be both a lucrative and risky venture, and GameStop stocks are no exception. With the recent surge in stock prices, whether you can make money with GameStop stocks has become a popular topic.
You can make money with GME stocks, just like any other stock – there is nothing special about GME stocks. Some recent ups and downs in the GME stock have brought this company under the microscope. Before investing, every investor should understand some key things about GME stocks.
This blog will explore the potential of investing in GameStop stocks. We will also shed light on the risks and rewards that come with it. Whether you are a new investor or a seasoned trader, this blog provides you with a comprehensive overview of GameStop stocks. So, let’s dive right into it!
Table of Content
Should You Invest In GameStop Stocks?
GME stock was undoubtedly a source of excitement in 2021. Many investors who got in early on the stock have seen massive returns. However, it was a short-term play. It’s important to remember that to win big in the long term; you must invest in companies with strong fundamentals and positive profit outlooks.
The concern with GME stock is that the fundamentals could be better. There is also a lot of volatility in the stock, making it difficult to determine a clear buy point. If you are a short-term investor looking to make a quick profit, don’t invest in GME stocks. Short-term investors are one of the reasons behind the terrible performance of GME stocks.
If you decide to invest, make sure only to put in a small amount of money you can afford to lose. Also, the investment should be long-term, at least a few years.
GME History
GameStop used to be a major player in the video gaming industry. Located in Grapevine, Texas, the company’s stores were a destination for gamers looking for the latest game consoles and titles.
Not only could users get their hands on new releases, but GameStop also provided many other beneficial services to gamers. One such service is the chance to trade their old games for new or used copies. This allowed gamers to save money and stay up to date with their favorite titles.
In 2016, the company operated over 7,000 stores, with sales in the 12 months ending in January 2016 rising 4.3%. But with the rise of digital downloads, GameStop’s stronghold on the market began to slip. Now, the company runs just over 5,000 stores, and its same-store sales have seen a nearly 10% decline.
Competition from online retailers such as Amazon, Walmart, and Target has taken its toll on the company. The emergence of digital gaming has also been one of the main reasons. Today, GameStop is still a major player in the video gaming industry. Still, it has had to adjust to the changing landscape.
They had to find new ways to remain relevant and continue to provide gamers with the same level of service that they are known for. Despite the competition, the company remains a popular destination for gamers looking for games, accessories, and trade-ins.
Plus500 is a trusted global brand that offers an easy-to-use trading platform for online traders, alongside access to share trading, crypto and a thorough selection of CFDs.
79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
GME Stock Fundamentals
GameStop’s stock fundamentals have been steadily declining over the past few years. The analysts predicted a loss of $1.74 a share in fiscal 2022 and a further $59 million, or 82 cents a share, in fiscal 2023. Revenue is estimated to rise 12% to $6 billion in fiscal 2022, followed by a 4% drop to $5.8 billion in fiscal 2023.
GameStop’s top line is getting a boost this year from sales of next-generation Xbox and PlayStation consoles. But these products are sold at low-profit margins. This weak performance is reflected in the company’s EPS rating of just 44 out of 99. It means its fundamentals are weaker than 56% of all other stocks.
GME’s weak fundamentals also dilute its IBD Composite Rating. The IBD rating considers both the stock and its fundamental performance. GME stock has a Composite Rating of 51, meaning it trails behind half of all other companies.
For investors, it’s essential to focus on stocks with a Composite Rating of 90 or higher. Aiming for a composite rating of 95 or higher is even more ideal. Unfortunately, GME stock’s fundamentals are too weak to make it a viable option for growth investors.
The Volatility Of GME Stocks
It’s no secret that GME stock has been on a wild ride since the start of 2021. The stock has seen incredible gains and, then, a sharp sell-off. A combination of factors contributed to such ups and downs. As we look ahead, investors aren’t on the same page about the future of GME stock.
One of the main reasons for GME’s wild ride is the impact of short-term investors. In early 2021, short sellers held nearly 90% of GME stocks, a staggering statistic. However, as the stock surged, these shorts began to get squeezed, and the stock saw a sharp rise. Now, the shorts have pulled back, with only 9% of GME stock held in short positions.
The other major factor in GME’s rally has been the involvement of activist investor and billionaire Ryan Cohen. Cohen has increased his stake in GME to 13% and believes the company is undervalued. Investors are now wondering if Cohen can help the company turn itself around and continue its rally.
Wall Street analysts remain divided on GME stock. Many are still bearish on GME, citing its inability to compete in a digital world and its projected loss of money in 2021. These analysts remain steadfast in their recommendation to “sell” GME stock.
However, some investors are optimistic about GME stock, believing the company can pull off a fantastic turnaround. As the situation continues to evolve, investors will be waiting to see if GME stock can continue its rally or if it will fall back to its pre-2021 levels.
GameStop Stock Split
GameStop Corp (GME) announced a stock split via an SEC filing after the shareholders voted to permit the plan. With the split set to occur on July 21, many investors were wondering what a stock split is and how it will affect their shares.
A stock split is a process that divides a company’s existing shares into multiple new shares, increasing the total number of shares and decreasing the price of each share.
In GameStop’s case, the split is a four-to-one ratio, which means that if you hold one share of GameStop, you will receive three additional shares. Still, each share will be worth one-fourth of the original price.
The announcement of the GameStop stock split sent ripples through the stock market, as the closing price of the stock on July 13 was $117.41 before the disclosure. The next day, the stock price increased by 12%, as this news was somewhat anticipated. The shareholders voted for the GameStop stock split, which took effect on July 21.
Investors that held the GameStop shares in their account at market close on July 18 will be eligible to receive an additional three shares on July 21. But what does a stock split mean to a company and its investors?
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79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
A stock split is beneficial to both the company and its shareholders. For the company, it increases the stock’s liquidity as more investors put their money in the market.
For individual investors, their shares will be worth more in a smaller package. This is because the number of shares will increase, but the price per share will decrease.
It’s important to note that a stock split does not change the value of a company. It is also not a sign of a company’s future success or the health of its stock. However, it does show that the company is confident in its prospects and has a solid investor base.
Stock Split Reasons
Companies opt for stock splits for various reasons. Let’s take a look at some of the key factors that drive a company toward a stock split:
- The primary purpose of a stock split is to make a stock more attractive to new investors. Also,it makes the stock more accessible to potential investors.
- Stock splits make it easier for investors to purchase more shares as the share price decreases. This allows investors to diversify their portfolios while still being able to buy a larger number of shares. It also encourages more people to invest in the company, increasing its market capitalization.
- Stock splits also help to keep the share price stable as the number of shares in circulation increases. This, in turn, makes the stock more attractive to potential investors. It alsohelps to maintain a healthy level of liquidity in the market.
- In addition, stock splits help to reduce the cost of issuing new shares. When a company does a stock split, the number of outstanding shares increases.But the cost of issuing new shares remains the same. This means that a company can issue more shares without raising additional capital.
- Finally, stock splits can also give employees an ownership stake in the company. By awarding shares in the form of stock-based compensation, a company can maintain the pay benefits given to their employees.
Benefits Of Stock Split
Increase Liquidity: A stock split increases the total number of shares in circulation, creating more liquidity. Increasing the number of shares in circulation makes it easier for investors to buy and sell the stock. This can increase trading volume and potentially drive up the stock’s price.
Attract Investors: Stock splits can attract new and retain existing investors. The lower stock price can make the company’s stock more affordable. In addition, stock splits can also provide investors with an opportunity to diversify their portfolios.
Initial Decrease of Share Price: When a company splits its stock, there is an initial decrease in the share price. This is because the total number of shares has increased while the stock’s market value has remained the same. Although this can be a short-term disadvantage, it can ultimately be beneficial in the long term.
The subsequent increase of share price: Although there is an initial decrease in the share price after the stock split, there is potential for it to increase in the long term. The lower stock price can make it more attractive to potential investors. It can result in increased trading volume and a higher stock price.
Plus500 is a trusted global brand that offers an easy-to-use trading platform for online traders, alongside access to share trading, crypto and a thorough selection of CFDs.
79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
What Should You Do As An Investor?
There are no specific advantages for investors who already own shares of GameStop. The valuation of your shares is not going to change post-stock split. Although you will receive three additional shares of GameStop, they are one-fourth the price.
GameStop’s stock split can be an advantage for new investors. This is because the share price becomes more accessible after the split. Moreover, the company’s valuation may also increase, and the price will likely bump up.
If you are a long-term investor, there’s nothing you should worry about. If you intend to invest in GME stocks, remember that a long-term investment will be more fruitful than buying and selling shares quickly.
Conclusion
The answer to if you can make money with GameStop stocks is yes. But it requires careful consideration of the market and significant investment. With the right strategy, it is possible to make a profit.
But it is important to remember that investing in stocks can be risky and should be cautiously approached. As with any investment, it is essential to understand the potential risks and rewards before deciding to invest. Thanks for stopping by!
About the author – T.R. Carnegie
I am a retired investment banker who has invested heavily in energy stocks since 2005. My goal is to help people understand what is really going on behind the scenes and to provide them with the information they need to take control of their financial future. These days, I am an energy stock investor who has made money from oil, natural gas, coal, nuclear power, wind, solar, biofuels, storage, and battery technologies. In this blog, you’ll find ideas about investing in companies that will help us reduce our dependence on fossil fuels, increase access to clean energy, improve efficiency in manufacturing processes, and build products that save people money and protect the environment.
Award-Winning Trading Brokers:
Rating:
Regulated By:
FCA, CySEC, ASIC, FMA, FSA, FSCA
CySEC (EU), FCA (UK), ASIC (Australia)
BaFin, FCA
Demo Account:
✔ Free
✔ Free
✔ Free
Live Account:
$100
$200
0
Spreads From:
Variable from 0.5 bps
Variable from 1.0 bps in EUR/USD
Variable from 0.4 bps
Selection Of Instruments:
2000+
1000+
17.000+ (FX, Stocks, CFDs, Commodities and more)
Support:
24/7
24/7
24/7
Payout:
1 – 3 Days
1 – 3 Days
1 – 3 Days
79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
