GameStop is 'still a squeezable stock' and could be poised for post-earnings rally

By James Rogers

Videogame retailer and original meme stock GameStop reports second-quarter results after market close Tuesday

GameStop Corp., which reports second-quarter results after market close Tuesday, is "still a squeezable stock," according to Ihor Dusaniwsky, an analyst at S3 Partners.

Last quarter, GameStop shares (GME) fell more than 3% in the post-results trading session, weighed down by downbeat earnings and the company's plan to sell more stock. "Surprisingly although [GameStop's] stock price fell -3.4% on the earnings release the stock rallied with a +100% return in the month following the miss," Dusaniwsky wrote in a report released Monday.

"With shorts covering and longs buying it looks like there is positive price sentiment on both sides of the market," Dusaniwsky wrote. "If tomorrow's results come in at or near consensus it looks like [GameStop] is poised for a rally."

Related: GameStop, AMC stocks rise as 'Roaring Kitty' makes first social-media post in 2 months

Analysts surveyed by FactSet are looking for GameStop to report a loss of 9 cents a share and sales of $896 million. Dusaniwsky points to consensus revenues expected to come in at $896 million and a loss of 1 cent a share.

GameStop has also been notable as a "squeezable" stock this year, according to the analyst. "[GameStop] has been a very squeezable stock in 2024 with 25.5 million shares, worth $609 million, of short covering during the year, a -42% decline in total shares shorted," he wrote. "Over the last thirty days we have seen the trend continue with 1.4 million shares bought to cover, worth $33 million, a -4% decline in total shares shorted."

"[GameStop] is a still a squeezable stock right now," Dusaniwsky added, noting that it has a 75/100 S3 squeeze score but hit the 100/100 level many times in the first six months of the year as its stock price rallied. "[GameStop] shorts are down -$505 million in year-to-date mark-to-market losses, down -54% for the year and are down -$17 million in September month-to-date mark-to-market losses, down -2% for the month," he wrote.

Related: GameStop has ended a $250 million credit facility. The stock is on pace for its biggest gain since June.

Short interest as a percentage of GameStop's public float of shares is 9.3%, according to the latest exchange data.

Shares of the videogame retailer and original meme stock are up 1.2% Monday, outpacing the S&P 500 index's SPX gain of 0.9%.

Earlier this year, GameStop shares, and those of fellow original meme stock AMC Entertainment Holdings Inc. (AMC), were lifted by the return to social media of influential trader Keith Gill, also known as Roaring Kitty. Gill was an important figure in the 2021 meme-stock frenzy that sent shares of GameStop and AMC skyrocketing.

Related: GameStop faces 'near insurmountable barrier' in its return to growth, says Wedbush

GameStop shares are up 38.1% in 2024, compared with the S&P 500 index's gain of 14.4%.

-James Rogers

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09-09-24 1528ET

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