Why GameStop Stock Is Still Wildly Overpriced
GameStop's (NYSE: GME) stock price recovery from single-digit levels began with a short squeeze inspired by Reddit's WallStreetBets blog site. Outsized enthusiasm for the stock has offered a needed lifeline to GameStop, enabling it to raise capital and revive its ailing retailing business.
While this move increases the odds of GameStop's survival, its business model and financials indicate limited further upside. That strongly suggests the stock is overpriced. Here's why.
The retailer previously built a competitive advantage as a one-stop-shop for all things gaming, especially electronic gaming. Customers could visit GameStop to find the latest video games, get refurbished hardware, and buy, sell, or trade games. However, the rise of downloadable video game sales slowly made GameStop an unnecessary middleman as gamers could buy games and upgrades more easily directly from manufacturers.
Source Fool.com
