Here’s Why GameStop (GME) Stock Is Back In The Limelight

GameStop Corp. (NYSE:GME), formerly called Babbage’s, started operating as a small software retailer back in 1984. Barnes & Noble acquired Babbage’s in the late 90s. Later, it merged with video game retailer Funco, which was renamed GameStop in 2000. GameStop went public in 2002 after pricing its shares at $18 apiece. Today, GameStop is a dominant player in the video game and consumer electronics space.

The Dallas, Texas-based company has been consistently trading on heavy volume since the start of 2021. GameStop stock value has skyrocketed nearly 800 percent so far this year. Much of that growth was driven by Reddit’s platform wallstreetbets, where millions of small investors bought shares of the video game retailer.

The sudden surge in GameStop’s share price forced many hedge funds to close their short position in the company earlier this year. Some had to incur heavy losses. For instance, Hedge fund Melvin Capital, which was previously expecting GameStop stock to drop, lost nearly $3 billion after GME shares rose to new highs in January.

GameStop stock once again came into the limelight recently after the company announced its financial results for the fourth quarter. GameStop reported earnings of $80.5 million, or $1.19 per share for the three months ended January 30, significantly higher than earnings of 32 cents per share in the comparable period of 2019. However, the adjusted earnings of $1.34 per share were marginally below the consensus forecast of $1.35 per share.

Revenue for the quarter came in at $2.12 billion, down from $2.19 billion in the year-ago quarter. Analysts on average were expecting GameStop to post revenue of $2.21 billion. Same-store sales in the quarter increased 6.5 percent, while online sales climbed 175 percent.

Follow Gamestop Corp. (NYSE:GME)

GameStop shares plummeted more than 30 percent on Wednesday following the lower-than-expected quarterly results. However, the stock surprisingly rebounded on Thursday, rising nearly 40 percent in mid-day trading.

The latest surge follows a price target hike from Jefferies Financial Group on Wednesday. The research firm lifted its price target for GameStop stock from $15 per share to $175 per share.

See also Top 30 Video Games of All Time and Top 10 Video Gaming Stocks To Buy Now.