Is Gamestop a Buy after dropping 12% today?

🌟🌟🌟All eyes were on $GameStop(GME)$ CEO Ryan Cohen today as he held the meeting on Gamestop's future.  However investors were rather disappointed due to lack of material announcements from Ryan Cohen such as his plan for Gamestop's cash pile or potential acquisition of another company.

The meeting only lasted 30 minutes with Ryan Cohen promising to cut costs by having a smaller network of stores with an expanded assortment of higher value items that fit into Gamestop's trade in model.

Gamestop was unprofitable for the quarter ended May 4 with a net loss of USD 32.3 million compared to a loss of USD 50.5 million last year.

However Gamestop has a strategic advantage due to its strong Balance Sheet.  Since May 17, Gamestop has issued 120 million shares, which resulted in gross proceeds of USD 3 billion. 

However in issuing more shares, there is dilution in the stock.  Gamestop's shares now totalled 426.21 million as of June 10, up 21% compared to 351.18 million shares on May 22.

Gamestop's shares dropped 12% today but in the past 5 days it is still up by 3.1%.  Gamestop share price has now risen 51% year todate.

I am surprised that Roaring Kitty aka Keith Gill was missing in action today.   After 3 years of silence, Roaring Kitty roared back to life in May sending Gamestop closing up 74% on May 13.    It was the biggest intraday trading jump for Gamestop since the meme craze of early 2021.  Other meme stocks like $AMC Entertainment(AMC)$ 

jumped as well. 

It is  tough operating a chain of brick and mortar stores at a time when online gaming is very much the vogue.  Gamestop has to compete with companies like $Amazon.com(AMZN)$  where consumers can buy digital software and video games online. 

$Microsoft(MSFT)$  has acquired Activision Blizzard in October 2023 and put it under its Microsoft Gaming Business Unit as a division to XBox Game Studios. 

AMC which operates the largest chain of theatres in the US and the world is facing stiff competition from digital streaming competitors such as $Netflix(NFLX)$  and even Disney. 

I believe that the meme stock rally is cooling off since May.  However I would not short Gamestop nor AMC as there is a possibility of Short Squeeze.  This is a situation in which the price of a stock rises to such an extent that investors who have sold short purchase the stock in order to limit their losses, causing the price to rise further. 

Meme stocks craze are fuelled by social media.  Fundamentally Gamestop and AMC are losing money.  

Is Gamestop a Buy now?  The answer depends on the risk appetite of a person.  Trading meme stocks can be exciting but scary.  I prefer JOMO - the joy of missing our rather than FOMO - the fear of missing out.

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