GameStop (GME) is undoubtedly the stock of the week. The gaming retailer spiked Monday after retail investors chatting on Reddit talked the company up, forcing a massive squeeze among short sellers.
This week so far, GameStop is up more than 450%. And today alone, shares have risen more than 100%.
Is your head spinning yet?
Well, this momentum might not last, according to analysts at Bank of America (BAC).
GameStop has underperformed for years, they noted, adding that hopes for a turnaround will likely not be enough to really offset the structural pressures the company faces.
The pandemic has forced GameStop to shift more online, where 30% of its sales are now generated — and which GameStop bulls see as a major opportunity. But Bank of America is still skeptical:
Very simply, the more business that shifts from in-store transactions, the more difficult it will be to sell high margin pre-owned and collectibles merchandise which accounted for 46% (estimate) of gross profit dollars in 2019,” said BofA analysts in a note.
Bank of America’s price target for GameStop is $10 … and the company currently trades at more than $370 per share.