The extent to which a stock’s price changes over time is important to most investors, as price performance can both impact your investment portfolio and help you compare results. investment between sectors and industries.
FOMO, or the fear of missing out, also plays a role in investing, especially with tech giants and popular consumer stocks.
What if you invested in GameStop (GME) ten years ago? It might not have been easy to hold onto GME all this time, but if it was, how much would your investment be worth today?
GameStop activity in depth
With that in mind, let’s take a look at the main business drivers of GameStop.
Based in Grapevine, TX, GameStop Corp. is the world’s largest video game retailer. The company offers the best selection of new and used video game consoles, accessories and video games, in both physical and digital formats. The company’s unique buy-sell-trade program allows customers to trade in video game consoles, games and accessories, and other electronics for cash or store credit. Through all of its channels, the company sells various types of digital products, including downloadable content, network point cards, prepaid digital subscription cards and digitally downloadable software as well as collectible products.
The company also publishes Game Informer, the world’s largest print and digital video game publication, which features reviews of new title releases, game tips, and news regarding current developments in the video game industry. It also manages the PowerUp Rewards program.
The company operates in four geographic segments: the United States, Canada, Australia and Europe. The company operates nearly 4,816 stores around the world.
The company’s products are classified as follows:
Hardware and Accessories (49.7% of FY20 sales): GameStop offers new and used video game platforms from major console and PC manufacturers. The current generation of consoles includes the Sony PlayStation 4 (2013), Microsoft Xbox One (2013) and the Nintendo Switch (2017). The accessories mainly consist of controllers, gaming headsets, virtual reality products and memory cards.
Software (38.9% of sales): The company supplies new and used video game software for current consoles and some of the previous generations. It also sells a wide variety of in-game digital currencies and digital downloadable content.
Collectibles (11.4% of sales): The category includes licensed products, primarily related to the video game, television and film industries and pop culture themes, which are sold through the game store video and e-commerce properties of the company, and ThinkGeek and Zing Pop Culture Stores.
According to the company’s August 31 filing, RC Ventures, an investment firm managed by Ryan Cohen, acquired a 9.6% stake with approximately 6,215,326 shares.
At the end of the line
Building a successful investment portfolio requires a combination of research, patience, and a little bit of risk. For GameStop, if you bought stocks ten years ago, you are probably feeling very good about your investment today.
An investment of $ 1,000 made in May 2011 would be worth $ 6,517.38, or a gain of 551.74%, as of May 25, 2021, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
Compare that to the S&P 500 rally of 218.86% and gold’s return of 18.69% over the same period.
Looking ahead, analysts expect more benefits for GME.
GameStop shares have risen and overtaken the industry for the past three months. The company has made careful efforts to accelerate its growth. It has a particular focus on expanding into the digital arena. To accelerate the transformation, the company resorted to restructuring its board of directors. He also undertook a capital restructuring to support growth. In this context, it finalized the repurchase of senior notes worth $ 216.4 million. In addition, he completed the sale of 3.5 million shares, helping him profit from the massive price spike seen since January, due to potential short-squeeze events. Apart from that, GameStop released encouraging preliminary sales figures for the nine weeks ended April 3, 2021, during which total worldwide sales increased by 11%. The company was able to achieve sales growth despite the challenges of the pandemic.
In the past four weeks, stocks have risen 6.56% and there have been 2 higher revisions to earnings estimates in the past two months for fiscal 2021, compared to none lower. The consensus estimate has also increased.
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