Investors Buy High Volume of Call Options on GameStop (NYSE:GME)

GameStop Corp. (NYSE:GME) was the recipient of some unusual options trading activity on Wednesday. Stock investors bought 245,499 call options on the company. This is an increase of 58% compared to the typical daily volume of 155,655 call options.

GameStop Stock Up 2.7%

GME opened at $20.42 on Friday. GameStop has a 1 year low of $17.79 and a 1 year high of $28.10. The firm has a 50 day moving average price of $20.06 and a 200 day moving average price of $21.99. The company has a debt-to-equity ratio of 0.68, a quick ratio of 11.91 and a current ratio of 8.72. The company has a market cap of $9.16 billion, a PE ratio of 13.43 and a beta of 1.72.

GameStop (NYSE:GME) last announced its quarterly earnings results on Tuesday, September 8th. The company reported $0.27 earnings per share for the quarter, meeting analysts’ consensus estimates of $0.27. GameStop had a net margin of 25.16% and a return on equity of 13.57%. The firm had revenue of $790.20 million for the quarter, compared to analysts’ expectations of $756.85 million. During the same period in the previous year, the company posted $0.31 earnings per share. GameStop’s revenue was down 18.7% compared to the same quarter last year.

Wall Street Analyst Weigh In

GME has been the subject of several research analyst reports. Wall Street Zen lowered shares of GameStop from a “buy” rating to a “hold” rating in a research report on Monday. Weiss Ratings reissued a “hold (c)” rating on shares of GameStop in a research note on Wednesday, July 29th. One investment analyst has rated the stock with a Hold rating, Based on data from MarketBeat, the stock has a consensus rating of “Hold”.

Insider Activity

In other GameStop news, General Counsel Mark Robinson sold 7,083 shares of GameStop stock in a transaction dated Wednesday, July 1st. The shares were sold at an average price of $22.38, for a total transaction of $158,517.54. Following the completion of the transaction, the general counsel owned 108,147 shares in the company, valued at approximately $2,420,329.86. The trade was a 6.15% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the SEC, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Lawrence Cheng bought 55,000 shares of GameStop stock in a transaction that occurred on Tuesday, September 8th. The stock was bought at an average cost of $18.80 per share, for a total transaction of $1,034,000.00. Following the purchase, the director owned 143,000 shares in the company, valued at $2,688,400. This represents a 62.50% increase in their position. Additional details regarding this purchase are available in the official SEC disclosure. In the last three months, insiders bought 1,060,000 shares of company stock worth $21,514,000 and sold 18,125 shares worth $406,587. Insiders own 9.50% of the company’s stock.

Hedge Funds Weigh In On GameStop

Several hedge funds and other institutional investors have recently made changes to their positions in the business. Northwestern Mutual Wealth Management Co. raised its position in GameStop by 308.9% in the third quarter. Northwestern Mutual Wealth Management Co. now owns 969 shares of the company’s stock valued at $26,000 after purchasing an additional 732 shares during the period. EverSource Wealth Advisors LLC lifted its stake in shares of GameStop by 226.6% during the second quarter. EverSource Wealth Advisors LLC now owns 1,277 shares of the company’s stock worth $31,000 after purchasing an additional 886 shares in the last quarter. Advisory Services Network LLC purchased a new stake in shares of GameStop in the third quarter worth about $39,000. Los Angeles Capital Management LLC purchased a new stake in shares of GameStop in the fourth quarter worth about $39,000. Finally, Rockefeller Capital Management L.P. grew its stake in shares of GameStop by 805.6% in the fourth quarter. Rockefeller Capital Management L.P. now owns 2,264 shares of the company’s stock valued at $45,000 after buying an additional 2,014 shares in the last quarter. Institutional investors and hedge funds own 29.21% of the company’s stock.

GameStop News Summary

Here are the key news stories impacting GameStop this week:

• Positive Sentiment: CEO Ryan Cohen purchased 1 million GME shares for approximately $20.4 million, increasing his ownership by 2.61%. Director Alain Attal also bought 5,000 shares for $100,000, while Director James Grube purchased 10,255 shares for roughly $196,000. The purchases may reinforce investor confidence in GameStop’s valuation and strategy. Ryan Cohen GameStop stock purchase filing James Grube GameStop stock purchase
• Positive Sentiment: Director Lawrence Cheng recently bought 55,000 shares for about $1.03 million, increasing his direct stake by 62.5%. The cluster of insider buying following earnings is supporting the bullish case among retail investors. Lawrence Cheng GameStop stock purchase
• Positive Sentiment: GameStop reported adjusted EPS of $0.27, matching consensus, while revenue of $790.2 million exceeded estimates near $756.8 million. Collectibles revenue jumped 57%, providing evidence that the company’s merchandise strategy may be gaining traction. GameStop second-quarter earnings beat
• Neutral Sentiment: Unusually high call-option activity and speculation about how Ryan Cohen may deploy GameStop’s large cash balance are adding to trading momentum, but they do not establish a fundamental change in the business. Reports that GameStop may reconsider an eBay bid also remain unconfirmed. GameStop eBay speculation and earnings
• Negative Sentiment: Revenue declined 18.7% year over year and EPS fell from $0.31 to $0.27, with software and hardware sales weakening. Analysts continue to question whether collectibles growth can offset contraction in GameStop’s traditional gaming operations; one report favors eBay as the cleaner, more profitable investment. GameStop comeback case and eBay comparison

GameStop Company Profile

GameStop Corp. is a multichannel retailer specializing in video games, gaming hardware, accessories and related entertainment products. Its offerings include new and pre-owned consoles and games, controllers, headsets, collectibles, apparel, toys and trading cards. The company sells through its retail stores, e-commerce websites and other digital channels.

Founded in 1984 as Babbage’s, the company expanded through acquisitions and adopted the GameStop name in 2000. It has historically operated stores in the United States, Canada, Australia and several European markets, although its international footprint has changed over time as the company has closed or sold certain operations.