GameStop stock falls after SEC investigation

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Investments are the tool that is given to everyone to successfully develop or save personal funds. Investments have nothing to do with playing in casinos non gamstop no deposit bonus, because in such institutions the player’s money depends only on his luck, but things are very different with investments in assets, where invested funds are directly dependent on the success of the company and competent decisions of their management.
Such successful investments have been, until recently, the shares of GameStop.

About GameStop

GameStop is an American-based retailer of game consoles, video games and other electronics.

Although the company used to be mega popular and its shares skyrocketed thanks to foreign investors and PR campaigns organized by the owners themselves, GameStop has had meager sales lately. This phenomenon was not without a pandemic that swept the whole world. A role in this cycle of events has played online venues that began to offer steep games, for example, as in the At the same moment, the demand not only for game consoles, but also for video games themselves, declined sharply.

Sequence of decline in a company’s stock

The once-successful company was once setting records for investment and stock growth. The rapid growth seemed to provide the company with a stable foundation for future development and expanded opportunities and directions for GameStop, but in practice things have turned out somewhat differently. Failures have haunted the company since 2019 and have continued this year. But first things first…

It started with GameStop reporting a loss of $61.5 million in its Q2 2020 report. The company had intended to expand its profits and investments through sales, but unfortunately, the pandemic has made its adjustments to GAMESTOP.

A year earlier, the CEO, put out a report that the company had lost another double that 2020: $111.3 million. That is, it turns out that last year Gamestop recovered profitability in half, but never went to a solid profit.

After this unexpected failure, the head of Gamestop declined any comment.

The company also gave no projections for the coming quarter, and did not provide answers to available questions about its profitability during the conference call. However, it did say that the Securities and Exchange Commission (SEC) required the company to provide additional documents regarding its profitability. Such demands were made because of the earlier surge in GameStop’s stock price. At that time, the organization also stressed that the SEC investigation will not affect either the profitability of the company, or its growth, or the share price. Additionally, GameStop announced that the SEC had contacted its staff on May 26 as part of an investigation into its trading activities and was awaiting a decision on the investigation.

The head of GameStop also said that he planned to apply for registration with the SEC for up to 5 million additional shares, which, if granted, would dilute the value of the current shares held by investors.

However, on June 10 shares of GameStop plummeted 27% after it was announced that the U.S. Securities and Exchange Commission (SEC) is investigating the video game retailer’s trading activities.

To recap: the retailer became a “meme stock” earlier this year after a roller coaster ride with Reddit-driven stocks that led it to sell an additional $1 billion worth of stock.

What are analysts saying?

Active investors are now taking such numbers as a reaction to the company’s reorganization and transition to a new sales business model.

Michael Pachter (an analyst at Wedbush) rates GameStop’s current stock as below market and sees the real price at $40. He reasoned that such a price is because the company’s current stock price is not consistent with reality and has no business foundation whatsoever.

Although GameStop reported better quarterly results than most analysts had previously predicted, it did not save the company from another collapse: its stock price plummeted at the close of trading on Sept. 08, 2021.

Shares of the retailer GameStop plummeted another 7%, but the director assured investors about the upcoming tremendous changes, including the change of management, which should have a positive impact on the fate of the company.

Market experts emphasize that such unfavorable results lie specifically in the company’s business model and it should be changed immediately.

What the future may hold for such a large company is still a mystery, but one thing is clear right now: in order to see the skyrocketing growth of the company’s stock value, a miracle must happen or the management must take unrealistically convincing decisions, up to and including complete change of the business model. What awaits the company right now – stay tuned!