Published on 29 May 2024 on GuruFocus.com via Yahoo Finance
GameStop Corp. (NYSE:GME) is considered the king of meme stocks and most of the investing literature that can be found around the stock revolves around its meme feature.
The purpose of this discussion is to present an analysis of the company's fundamentals beyond its fading meme feature. Indeed, GameStop is a business with shrinking sales and a falling investor base. At a current price-earnings ratio of above 1,000, the potential meme premium in its valuation is unsustainable in the absence of the retail investors' euphoria that existed in 2021. The business continues to decline and the possibility for the stock to become unlisted at some point in the future is real. Furthermore, the meme feature of the stock is becoming obsolete and focusing on fundamentals is increasingly important when engaging in the trading of GameStop shares.
The rally is unlikely to be sustained as the meme feature is fading