Why GameStop (GME) Stock Is Down Today

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Why GameStop (GME) Stock Is Down Today

Shares of video game retailer GameStop (NYSE:GME) fell 5.2% in the morning session after the major indices declined sharply (Nasdaq down 1.9%, S&P 500 down 1.1%) as investors appeared to be locking in some gains in a year marked by significant progress in the Fed’s effort to deliver a soft landing—taming inflation without causing more damage to the economy—despite early signs of weakness in the labor market.

With two more trading days to wrap up the year, investors are likely hoping for a “Santa Claus Rally.” So far, the Nasdaq has climbed more than 30% year to date, while the S&P 500 has gained over 25%, reflecting the resilience of the U.S. economy.

The improved momentum, especially in the second half of the year, was fueled by the ongoing investment in AI within the tech sector, the Fed’s continued dovish shift as inflation cooled, enabling the Powell-led committee to deliver three rate cuts (0.5% in September and 0.25% each in November and December).

Additionally, the November 2024 elections sparked optimism for more business-friendly regulations in energy, tech, and industrials following Donald Trump’s return to the presidency.

Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.

The shares closed the day at $32.22, down 2.4% from previous close.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy GameStop? Access our full analysis report here, it’s free.

GameStop’s shares are extremely volatile and have had 55 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 16 days ago when the stock gained 8.5% on the news that the company reported impressive third-quarter earnings, which blew past analysts’ expectations. Its gross margin also outperformed Wall Street’s estimates, fueled by a pivot to high-margin products and better control over stock levels. On the other hand, its revenue fell short. Overall, this quarter had some key positives.

GameStop is up 96.6% since the beginning of the year, but at $32.75 per share, it is still trading 32.8% below its 52-week high of $48.75 from May 2024. Investors who bought $1,000 worth of GameStop’s shares 5 years ago would now be looking at an investment worth $22,217.

When a company has more cash than it knows what to do with, buying back its own shares can make a lot of sense–as long as the price is right. Luckily, we’ve found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Special Free Report on a fallen angel growth story that is already recovering from a setback.

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