GameStop (GME): Evaluating Valuation as Speculative Trading Surges Ahead of Q3 Earnings Announcement

GameStop (GME) is back in the spotlight as investors ramp up trading activity and speculation ahead of its upcoming Q3 earnings call. The surge in options volume and short interest is fueling anticipation about what comes next.

See our latest analysis for GameStop.

GameStop has seen dramatic swings this year, with a trading frenzy building ahead of its Q3 earnings and events like “Trade Anything Day” grabbing attention. The share price is showing renewed short-term momentum, up 11.9% over the past week, even though its total shareholder return remains deep in the red year-to-date, and long-term returns since the meme stock boom remain sharply elevated. Investor sentiment seems to be shifting quickly, hinting at both speculative risk and pockets of growth potential.

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With GameStop once again capturing market attention, the big question is whether recent momentum signals an undervalued opportunity or if the latest gains have already accounted for any rebound in growth potential.

Most Popular Narrative: 81.2% Undervalued

With GameStop trading at $22.53, the prevailing narrative from the bulls places its fair value at $120. This dramatic gap is igniting debate about what the market might be missing.

GameStop’s Q1 2025 financials, combined with an amazing shareholder community, just showed its takes-money-to-buy-whiskey strategy at work. This demonstrates its status as a compelling investment as the retail investors have been saying for years while fighting a corrupt legacy media, bots, social media manipulation, and hedge funds. GameStop delivered a stellar adjusted EPS of $0.17, beating estimates by 325%, and achieved a $44.8 million net profit, reversing last year’s $32 million loss. With $6.4 billion in cash and zero long-term debt, GameStop enjoys unparalleled financial flexibility. Its strategic holding of 4,710 Bitcoin, valued at $516.6 million, positions it to capitalize on Bitcoin’s surge (near $112,000). The board, led by Ryan Cohen, who does not take a salary and owns a significant chunk of shares (about 10% of the float), has driven efficiency through aggressive cost-cutting, closing about 590 stores and exiting unprofitable markets like Canada and France, boosting margins. The Direct Registration System (DRS) shows 75 million shares (nearly 25% of float) locked by loyal retail investors, reducing short-selling pressure and signaling strong shareholder commitment. This dedicated base, evident in vibrant online communities, fuels resilience against market volatility and supports potential short squeezes. GameStop’s transformation from a legacy retailer to a crypto-invested, cash-rich entity underscores its long-term growth potential. Investors might be early, but they are not wrong.

Read the complete narrative.

Want to know which wild financial bets and margin-boosting moves justify such a massive price target? The narrative’s bold prediction hinges on shifts in Bitcoin, a fearless board, and a fiercely loyal investor base. Dive in to discover the full playbook. These assumptions will surprise you.

Result: Fair Value of $120 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing market volatility and uncertainty around long-term profitability could quickly shift investor sentiment, which may put pressure on GameStop’s bullish thesis.

Find out about the key risks to this GameStop narrative.

Another View: Market Multiples Signal Caution

While the bullish community sees GameStop as heavily undervalued, our analysis using price-to-earnings metrics tells a different story. GameStop’s multiple of 27.9x is much higher than both the industry average of 18x and peers at 19.5x. This suggests it may actually be expensive right now. Could the market be running ahead of fundamentals?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own GameStop Narrative

If you see the story differently or want to dig into the numbers yourself, it takes just a few minutes to shape your own perspective. Do it your way

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding GameStop.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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