GameStop Video 08.06.21.
Shares of GameStop gained strong upside momentum today as traders continued to push the stock higher ahead of the release of the company’s first quarter fiscal 2021 earnings report. The report will be issued on Wednesday, June 9, 2021, after the market close.
Analysts expect that GameStop will report a loss of $0.83 per share. Earnings estimates for the full-year have actually trended down in recent months, and the market expects that GameStop will report a loss of $1.02 per share, which is projected to be followed by a loss of $0.59 per share in the next year.
Typically, declining earnings estimates serve as a bearish catalyst for a stock, but GameStop’s valuation is completely detached from fundamentals so it remains to be seen whether traders will pay attention to the company’s financials when it releases its earnings report.
The key question for the market right now is whether traders will use the earnings report as a catalyst to sell GameStop shares as the company is overvalued by any meaningful valuation metric.
I’d note that Gamestop shares are moving higher at a very low trading volume compared to the volume that we have seen back in January – March when the stock was especially active.
This means that there are few sellers of the stock, which allows buyers to push the company’s shares higher without using significant funds. In addition, the thin market is a true nightmare for short sellers who are trying to get out of their positions.
At this point, it looks that dynamics of GameStop shares will depend on social media activity and short sellers’ problems rather than on the company’s earnings report. However, if the market decides to focus on GameStop’s earnings instead of the current short squeeze, the stock may gain significant downside momentum.
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This article was originally posted on FX Empire
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