GameStop shares are up nearly 40% Wednesday after the video game retailer posted its first quarterly profit in two years, and its success brought other former meme stocks along for the ride.
At least for a minute, anyway.
AMC Entertainment, another darling of the meme stock short-squeeze era, saw its shares jump more than 7% Wednesday morning despite no significant news, and Bed Bath & Beyond stock climbed nearly 9%.
The jumps were short-lived, though, as AMC and BBBY were trading up 1.1% and down 1.3% shortly before the Wednesday close.
GameStop has managed to hold onto its gains for the time being. Notably, despite maintaining an ‘Underperform’ rating and pessimistic outlook overall, Wedbush analysts increased their price target for GameStop to $6.50 from $5.30 on Wednesday. Its shares traded at $24.27 Wednesday afternoon.
“GameStop delivered a profitable holiday quarter, as it had done in every year of its existence except for 2021,” Wedbush analysts wrote Wednesday. “The lack of profitability last year caused us to expect that GameStop couldn’t manage expenses, and the company surprised us by doing so exceedingly well.”
However, the firm also noted longer-term concerns.
“Longer term, the company cannot save its way to prosperity as new-gen hardware sales inevitably cool off and physical sales of video games continue on their multi-year downward trajectory, with that negative momentum buoyed by the growing appeal of mobile and subscription offerings for gamer hours and dollars,” analysts said.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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