GameStop (GME) Faces 40%+ Plunge Ahead of Q2 Earnings—Analyst Warns Meme Stock Reality Check

GameStop's Q2 earnings loom—and one analyst predicts a brutal 40%+ downside. The meme stock darling faces a reckoning beyond retail hype.

Earnings Exposed

GME's upcoming report could strip away the speculative frenzy. No fundamentals? No problem—until now. The analyst call isn't just cautious; it's a direct challenge to the narrative-driven rally.

Retail vs. Reality

While Reddit threads buzz, the numbers might tell a different story. A 40% drop isn't a dip—it's a correction waiting to happen. Classic finance folks are already smirking—turns out 'stonks' don't always go up.

Bottom Line: Meme momentum meets earnings gravity. Sometimes the only thing riskier than a short position is blind faith.

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What to Expect on September 9

Wall Street analysts expect the company to report earnings of $0.19 per share, versus $0.01 in the year-ago quarter. Also, revenue are expected to increase by 13% from the year-ago quarter to $900 million, according to data from the TipRanks Forecast page.

With Q2 earnings just days away, investors will be looking for signs that GameStop can stabilize its operations and deliver a clearer long-term strategy.

GME’s Q1 Shows Profit Surprise and Sales Slump

In the last reported quarter, GameStop reported earnings per share (EPS) of $0.17, well ahead of Wall Street’s $0.04 estimate. The company also posted a net profit of $44.8 million, marking a sharp improvement from a loss in the prior year. However, revenue fell 17% year-over-year to $732.4 million, missing analyst expectations of $754.2 million, as weakness persisted in its Core video game hardware and software business.

One bright spot was collectibles, which grew 54% to $211.5 million in the quarter. GameStop also ended Q1 with a hefty cash balance of $6.4 billion.

According to Main Street Data, GME’s Hardware and Accessories segment has been on a downward trend, with recent quarters showing significant declines from earlier levels.

Is GME Stock a Buy, Sell, or Hold?

GameStop’s fundamentals and unpredictable trading patterns have led many Wall Street analysts to take a step back from covering the stock. One of the few analysts still covering this stock is Alicia Reese of Wedbush, who continues to maintain a Sell rating. According to her, she sees more than 40% downside for GameStop based on her price target of $13.50 per share.