GameStop might have a Trump card or GTA 6 wildcard in the mix

GameStop Corp. (NYSE:GME) shares have been perky over the last week as investors eye if the election could re-ignite buying action in certain meme names, with Trump Media & Technology Group Corp. (DJT) almost assuredly set for a volatile week. During the last two weeks, GameStop (GME) has seen strong trading correlation with DJT than broad stock market or retail sector averages.

Strategy

There is still the question of what the master plan is at GameStop (GME). The Texas-based company has announced the opening or restyling of several “retro” locations that sell old consoles and hardware, as well as software discs. The retailer’s retro website also includes games for NES, SNES, Game Boy, Game Boy Advance, N64, DS, GameCube, Wii, Wii U, PS1, PS2, PS3, PS Vita, Xbox, Xbox 360, Sega Dreamcast, Sega Saturn, and Sega Genesis.

The retailer has also said it will become an authorized PSA dealer, and PSA will provide authentication and grading services for trading cards through select GameStop (GME) stores across the United States. As part of its trading card program, GameStop (GME) said customers can drop off ungraded trading cards at a participating GameStop (GME) location.

In an SEC filing, GameStop (GME) disclosed that as part of its efforts to achieve sustained profitability, the company continues to evaluate its international assets and operations to determine their strategic and financial fit and to eliminate redundancies and underperforming assets. GME has also initiated a comprehensive store portfolio optimization review.

The core product

Of course, GameStop (GME) is still a videogame and console retailer and depends on consumer demand for those categories. Looking at recent trends, the latest data from Circana indicated that EA Sports FC 25 (EA) was September’s best-selling videogame and reached the highest U.S. month dollar sales of any soccer game released to date. Astro Bot was the second best-selling game of the month. However, U.S. videogame sales fell 6% year-over-year for the month of September, while sales figures on a year-to-date basis are flat compared to 2023.

Cash

In terms of the retailer’s balance sheet, GameStop (GME) ended Q2 with $4.2 billion in cash and had long-term debt of $12.4 million. Since then, GameStop (GME) confirmed that it sold the maximum number of shares registered under the ATM Program for aggregate gross proceeds of approximately $400 million. GameStop (GME) management has not tipped off any specific plans for the cash pile.

Looking ahead

Baird analyst Colin Sebastian and his team still have limited confidence in GameStop’s (GME) ability to restore growth and improve profitability, but think a smaller store footprint with a modernized consumer experience may help improve the performance. “While retail shareholder dynamics are seemingly the only support to valuation and liquidity, bulls could also point to hardware and the expected release of GTA VI next year as catalysts,” highlighted Sebastian.

Grand Theft Auto VI (known as GTA 6) is currently slated for release in Fall 2025 on PlayStation 5 and Xbox Series X/S, as confirmed by Rockstar Games and its parent company Take-Two Interactive (TTWO). Of course, the Grand Theft Auto franchise has a massive following, and its releases are typically major events in the gaming industry. More importantly, some gaming enthusiasts maintain that GTA 6 played from a physical disk will be a superior gaming experience.