What's Going On With GameStop Stock On Wednesday?
Portfolio Pulse from Anusuya Lahiri
GameStop Corp (NYSE:GME) is facing challenges in its core business but is leveraging its large cash reserves to earn interest, resembling a bank. Despite a significant drop in stock value, its enterprise value is more than double that of Best Buy Co (NYSE:BBY). GameStop's cash reserves could sustain it for a decade, and investing in U.S. treasuries could yield significant interest income. Investors can also gain exposure to GameStop via iShares Core S&P Mid-Cap ETF (NYSE:IJH) and Vanguard Small-Cap ETF (NYSE:VB).
June 26, 2024 | 1:28 pm
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NEUTRAL IMPACT
Best Buy's enterprise value is less than half of GameStop's despite both companies facing declining sales. This comparison highlights the financial challenges and market perception differences between the two companies.
The comparison with GameStop highlights Best Buy's relatively better performance in sales decline but lower market valuation. This may not significantly impact Best Buy's stock price in the short term.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 50
NEUTRAL IMPACT
GameStop is facing challenges in its core business but is leveraging its large cash reserves to earn interest, resembling a bank. Despite a significant drop in stock value, its enterprise value is more than double that of Best Buy.
GameStop's strategy of earning interest on cash reserves provides financial relief, but the core business struggles. The stock price may remain stable due to the financial buffer provided by the cash reserves.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEUTRAL IMPACT
Investors can gain exposure to GameStop via iShares Core S&P Mid-Cap ETF (NYSE:IJH), which includes GameStop in its portfolio.
The inclusion of GameStop in IJH provides indirect exposure to GameStop's financial performance. However, the impact on IJH's overall performance is likely minimal due to its diversified portfolio.
CONFIDENCE 70
IMPORTANCE 40
RELEVANCE 30
NEUTRAL IMPACT
Investors can gain exposure to GameStop via Vanguard Small-Cap ETF (NYSE:VB), which includes GameStop in its portfolio.
The inclusion of GameStop in VB provides indirect exposure to GameStop's financial performance. However, the impact on VB's overall performance is likely minimal due to its diversified portfolio.
CONFIDENCE 70
IMPORTANCE 40
RELEVANCE 30