3 Reasons to Avoid GameStop Stock
GameStop (NYSE: GME) has become one of the biggest investment surprises of early 2021. With the stock having climbed as much as 25-fold in January, it has drawn the attention of numerous investors. However, this interest has also brought unprecedented volatility and massive price swings. Given the company's business, its financials, and the speculative nature of the retail stock, investors should think twice about opening a position.
GameStop built a nationwide footprint by becoming a place to buy the latest video game releases. It also made itself a hub where people could buy, sell, and trade games, consoles, and accessories, and find other merchandise. That model made it a successful company until game makers began to sell their games via online downloads. With that change, GameStop lost much of its reason for being, sending the company's fortune and its stock plunging.
These struggles have also affected GameStop's top management. In February alone, the company appointed a new chief technology officer, and the chief financial officer announced that he would resign in March.
Source Fool.com
