GameStop (GME) is up once again, fueled by a cryptic holiday tweet from Roaring Kitty. The mysterious post of a simple photo of a wrapped gift was enough to send the internet into a frenzy, driving GME shares higher by as much as 9% premarket on Christmas morning.

But while meme traders celebrate, the underlying fundamentals tell a different story. GameStop has now gained nearly 80% in 2024, despite reporting declining revenues for five consecutive quarters. With its retail business struggling to compete against digital downloads and failed ventures like NFTs, investors are left wondering: is now the time to sell GME?

Let’s break down the latest developments and what they mean for GameStop stock using VectorVest’s proprietary system.

GME Has Poor Upside Potential, Fair Safety, and Excellent Timing

VectorVest is a proprietary stock rating system that tells you what to buy, when to buy it, and when to sell it - eliminating stress, guesswork, and human error from your decision-making.

It’s based on 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT). Each sits on a scale of 0.00-2.00 with 1.00 being the average. This makes interpretation quick and easy. 

You’re even given a clear buy, sell, or hold recommendation for any given stock at any given time based on its overall VST rating. As for GME, here’s what you need to see…

  • Poor Upside Potential: The RV rating is a far superior indicator to the typical comparison of price to value alone because it compares a stock’s long-term price appreciation potential (forecasted 3 years out), AAA corporate bond rates, and risk. GME has a poor RV rating of 0.48, indicating below-average potential for price appreciation.
  • Fair Safety: The RS rating is a risk indicator. It’s computed from a deep analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. GME earns a fair RS rating of 1.02, reflecting slightly above-average stability for a stock in its category.
  • Excellent Timing: The RT rating evaluates the stock’s price trend based on direction, dynamics, and magnitude of movement. GME’s RT rating of 1.58 reflects strong upward momentum, likely fueled by recent meme trader activity and market speculation.

With an overall VST rating of 1.15, GME is rated a BUY in the VectorVest system. The excellent timing suggests short-term opportunities for speculative investors, but the stock’s poor upside potential and uncertain long-term outlook warrant caution.

GameStop Strikes Again: Meme Stock Momentum or Time to Sell GME?

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VectorVest advocates buying safe, undervalued stocks, rising in price. GME’s latest rally might offer short term traders an opportunity, but the long term outlook remains murky at best. The company’s inability to effectively pivot its business model amid declining revenues and rising competition underscores the challenges ahead.

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