Key Stats for GameStop Stock
- 1- Year Price Change for GameStop stock: -11%
- $GME Share Price as of Jan. 26: $24.01
- 52-Week High: $35.81
- $GME Stock Price Target: $13.50
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What Happened?
GME stock surged over 4.4% on Monday after Michael Burry revealed he’s been buying shares of the video game retailer. Burry, the investor who famously bet against the housing market before the 2008 financial crisis, disclosed his position in a Substack post.
“I own GME. I have been buying recently,” Burry wrote. He explained that he’s purchasing shares at what he believes is close to tangible book value, essentially paying $1 for every $1 of real assets the company owns.
This news came just days after GameStop CEO Ryan Cohen personally bought 1 million shares worth approximately $21.4 million. Cohen made two separate purchases: 500,000 shares last Tuesday at $21.12 each, followed by another 500,000 shares on Wednesday at $21.60 per share.
These purchases increased Cohen’s ownership to roughly 42.1 million shares, representing about 9.3% of the company. In an SEC filing, Cohen stated that CEOs who don’t buy their own company’s stock with personal funds “should be fired.”
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What the Market Is Telling Us About GameStop Stock
The market’s positive reaction to both Burry’s disclosure and Cohen’s purchases suggests investors view these moves as strong signals of confidence.
When insiders put their own money into a stock, it typically indicates they believe the shares are undervalued.
Burry made it clear this isn’t a short-term speculation play. “I am not counting on a short squeeze to realize long-term value,” he wrote. Instead, he’s betting on Cohen’s ability to transform the business over the next 50 years.
GME stock has struggled recently, falling 36% last year amid a challenging retail environment. However, GameStop has raised billions through equity offerings during periods of elevated interest, leaving it with a substantial cash pile.
Cohen has been using this cash strategically. The company began buying bitcoin last year and has expanded into collectibles and trading cards.
“Ryan is making lemonade out of lemons,” Burry noted. “He has a crappy business, and he is milking it best he can while taking advantage of the meme stock phenomenon to raise cash.”
The timing of these purchases is also noteworthy.
- It follows GameStop’s announcement of a massive performance-based compensation package for Cohen.
- Under this plan, he only receives stock options if the company reaches a $100 billion market cap and $10 billion in cumulative EBITDA.
- Currently, GameStop’s market cap sits at just $9.3 billion, meaning the company would need to grow more than tenfold for Cohen to earn anything from the plan.
While GME stock remains volatile and the path forward uncertain, the fact that both Burry and Cohen are betting big on the company suggests they see significant upside potential that the market hasn’t yet recognized.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
