GameStop's Turnaround Is Working

Eric Novinson195 FollowersFollow5ShareSavePlay(14min)CommentsSummaryGameStop (GME) has successfully pivoted to collectibles, with this segment now comprising over 31% of quarterly revenue.GME improved margins and operating income by closing underperforming stores and reducing SG&A, but overall revenue is declining.Despite strong cash reserves and defensive positioning against short sellers, GME trades at a significant premium to peers.I estimate GME is slightly overvalued, projecting 14% downside; I rate the stock a hold. Aziz Shamuratov /iStock Editorial via Getty Images My thesis for investing in GameStop (GME) is that its pivot into collectibles succeeded. This store was originally a place where you could trade in video games, and it still is. But now, it’s alsoThis article was written byEric Novinson195 FollowersFollowI am a freelance business writer. I formerly wrote articles for the Motley Fool Blogging Network, where I won several editor's choice awards. After that, I wrote articles for the main Motley Fool site. I typically focus on restaurants, retailers, and food manufacturers, considering both growth opportunities and valuation metrics. I usually look for long term investment opportunities and plan to hold stocks for several years.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Recommended For You