GME: Is It Time to Hold Or Dump Your GameStop Stock?
Remember when Redditors rallied to send GameStop stock prices soaring? That was at the tail end of 2020 and into January 2021, and the shine from those events is still glimmering slightly on GME. But as a serious investor, is it still worth holding GameStop stock?
GME Doesn't Perform Well Organically
GME isn't historically a powerhouse investment. In the five years prior to the Reddit investment games of 2020 and 2021, the stock reached around $25.50 at its max, and from 2019 through late 2020, GME prices were on an ever-slow decline.
Investors have to consider how the stock performed before Reddit and other small traders created a frenzy around it. Because other than that frenzy, which certainly changed the financial game for the entertainment company, market forces aren't that different than they were before.
As of October 4, 2021, GME was coming in around $183, but will the stock eventually fall back to pre-shenanigan pricing? Bears say yes. Price charts are also trending slowly downward, supporting the bear position on GME.
Changes in GameStop Management
One pro for the bulls when it comes to holding GME is that GameStop did make some smart moves with the influx of cash it got in early 2021. Like a good financial steward, the business paid off debts to create a strong position monetarily.
GameStop also brought on Ryan Cohen, who formerly headed up Chewy, an online retailer of pet goods. Cohen's eCommerce experience is supporting some bold changes at GameStop, which definitely has to move from its previous brick-and-mortar mentality to digital environments to remain competitive in modern markets.
Bulls are pointing to these changes as a reason to keep GME in portfolios. They also like the fact that typically fickle Reddit users seem to continuously champion GME as a darling stock.
Do You Believe in the Long-Term Viability of the Business?
Whether or not GME is worth holding now depends mainly on your answer to this question.
Bulls are betting on the quirky nature of the stock and the fact that GameStop is using its 2021 windfall to position the company for digital markets.
Bears are worried about the fickle nature of small investors and when Reddit users might find another, more interesting stock game to play. They're also hedging on the fact that GameStop is an old-school video game company and there are too many new contenders to bet on to keep holding GME.