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GameStop (GME) Surges 47.45% on Roaring Kitty's YouTube Livestream: Technical and Fundamental Analysis

StockInvest.us, 2 weeks ago

Gamestop Technical Analysis

GameStop Corp. (GME) experienced a dramatic surge on June 06, 2024, closing at $46.55, marking a notable increase of 47.45% from the previous closing price. This surge was linked to the announcement by Keith Gill, known as "Roaring Kitty," who played a significant role in the meme-stock frenzy of 2020-2021, scheduling his first YouTube livestream in over three years.

The stock's Relative Strength Index (RSI) stands at 70, indicating that it is currently overbought. The 50-day and 200-day moving averages are $17.09 and $15.67, respectively, reflecting a strong upward momentum. Noteworthy is the MACD (3-month) value of 3.86, which aligns with the recent bullish trend.

Volatility is significant, as indicated by the Average True Range (ATR) of 13.75. Support levels are identified at $39.55, whereas resistance is pegged at $48.75. The sudden price surge brings attention to essential levels such as the stop-loss at $44.37.

Fundamental Analysis

From a fundamental perspective, GameStop's market cap currently stands at $14.25 billion, which is elevated compared to its past performance metrics. The company's Earnings Per Share (EPS) is slightly positive at 0.02, but the PE ratio of 2327.50 suggests that the stock is highly overvalued relative to earnings.

Gamestop Interestingly, the discounted cash flow (DCF) model estimates a negative intrinsic value of -20.41, indicating potential long-term financial instability or overvaluation concerns. Analysts' price targets consolidate to a median value of $15.30, substantially lower than the current trading price, signaling potential overvaluation. The consensus among analysts classifies the stock as a ‘Hold,’ reflecting mixed sentiments regarding its future performance.

Next Trading Day and Upcoming Week Predictions

For the next trading day and the upcoming week, the stock may exhibit continued volatility. Given the planned livestream by "Roaring Kitty," further speculative trading is anticipated. If the sentiment remains positive post-livestream, resistance could be tested at $48.75; however, should the euphoria fade, the stock could retrace towards its support at $39.55.

Long-term Investment Potential

In the long term, GameStop's intrinsic value and high PE ratio cast doubt on its sustainability at the current levels without substantial fundamental support. Despite the recent surge, longer-term investors may be cautious given the lack of robust earnings growth and underlying financial performance. The negative DCF suggests the stock is overvalued based on future cash flow projections.

Overall Evaluation

Taking into account both technical and fundamental analysis, GameStop (GME) can be categorized as a 'Hold' candidate. The stock currently exhibits a high degree of speculative trading, driven by market sentiment rather than fundamental strength. Investors should closely monitor upcoming events and earnings announcements scheduled for June 11, 2024, as they will provide crucial insights to validate or challenge the current elevated stock price.

Check full Gamestop forecast and analysis here.