GameStop Story

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GME -- USA Stock  

USD 13.89  1.11  7.40%

It looks as if GameStop will continue to recover much faster as its share price surged up 44.12% today. The entity's current daily volatility is 8.77 percent, with a beta of 0.85 and an alpha of 1.3 over DOW. As many millenniums are trying to avoid retail, it makes sense to digest GameStop a little further and try to understand its current market patterns. We will analyze why GameStop investors may still consider a stake in the business.
Published over two weeks ago
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Should we continue shadow GameStop (NYSE:GME) executives?
GameStop has roughly 735.1 M in cash with 375.7 M of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 11.28. The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. GameStop has an asset utilization ratio of 129.32 percent. This indicates that the company is making $1.29 for each dollar of assets. An increasing asset utilization means that GameStop is more efficient with each dollar of assets it utilizes for everyday operations.
Investing in GameStop, just like investing in any other equity instrument, is characterized by a strong risk-return correlation. High risks mean high returns and low risk means lower expected returns. Risk management is the act of identifying and assessing the potential risk and developing strategies to minimize these risks and earn maximum possible profits while holding GameStop along with other instruments in the same portfolio. Using conventional technical analysis and fundamental analysis to select individual securities into a portfolio complements risk management and adds value to overall investors' investing strategies.

How important is GameStop's Liquidity

GameStop financial leverage refers to using borrowed capital as a funding source to finance GameStop ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. GameStop financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between GameStop's total debt and its cash.

How GameStop utilizes its cash?

To perform a cash flow analysis of GameStop, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash GameStop is receiving and how much cash it distributes out in a given period. The GameStop cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities. GameStop Net Cash Flow from Operations is projected to decrease significantly based on the last few years of reporting. The past year's Net Cash Flow from Operations was at (414.5 Million)

GameStop Correlation with Peers

Investors in GameStop can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in GameStop. Diversification will allow for the same portfolio return with reduced risk. The correlation table of GameStop and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities GameStop is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with your current brokerage. Please check volatility of GameStop for more details

Another Deeper Perspective

GameStop is relatively risky given 1 month investment horizon. GameStop holds Efficiency (Sharpe) Ratio of 0.24, which attests that the entity had 0.24% of return per unit of risk over the last month. Our standpoint towards determining the volatility of a stock is to use GameStop market data together with company specific technical indicators. We are able to interpolate and collect twenty-eight different technical indicators, which can help you to evaluate if expected returns of 2.12% are justified by taking the suggested risk. Use GameStop Risk Adjusted Performance of 0.2186, downside deviation of 5.25, and Market Risk Adjusted Performance of 1.63 to evaluate company specific risk that cannot be diversified away.
Click cells to compare fundamentals   Check Volatility   Backtest Portfolio

Are GameStop technical ratios showing a recoup?

Latest expected short fall is at -5.62. GameStop is displaying above-average volatility over the selected time horizon. Investors should scrutinize GameStop independently to ensure intended market timing strategies are aligned with expectations about GameStop volatility.

Our Final Take On GameStop

Although other entities within the specialty retail industry are still a little expensive, even after the recent corrections, GameStop may offer a potential longer-term growth to shareholders. With an impartial outlook on the current market volatility, it may be better to hold off any inventment activity and neither buy nor drop any shares of GameStop at this time. The GameStop risk-reward trade off is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to GameStop.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Gabriel Shpitalnik do not own shares of GameStop. Please refer to our Terms of Use for any information regarding our disclosure principles.

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