GameStop Corp (NYSE:GME) shares are trading flat Thursday afternoon following news of a new compensation plan for CEO Ryan Cohen that aligns his incentives with long-term shareholder value. Here’s what investors need to know.
- GameStop stock is showing downward pressure. Where are GME shares going?
How GameStop’s New Plan Could Reshape Value
GameStop announced that its Board of Directors has granted Cohen a stock option award contingent on achieving specific market capitalization and EBITDA milestones. This performance-based structure means Cohen will only be compensated if these targets are met, potentially allowing him to earn stock options worth up to $35 billion if all milestones are achieved.
The compensation plan includes nine tranches, with the first tranche vesting if the company’s market cap reaches $20 billion and cumulative EBITDA hits $2 billion. Since Cohen joined the board, GameStop’s market cap has surged from $1.3 billion to $9.57 billion, reflecting a 635% increase.
The Mixed Signals Behind GameStop’s Price Movements
The stock is currently trading 0.8% below its 20-day simple moving average (SMA) and 7% below its 100-day SMA, indicating a bearish trend in the short to medium term. Over the past 12 months, shares have decreased by 35.21% and are positioned closer to their 52-week lows than highs, suggesting ongoing challenges for the company.
The RSI is at 48.28, which is considered neutral territory, while the MACD is below its signal line, indicating bearish pressure on the stock. The combination of neutral RSI and bearish MACD suggests mixed momentum.
- Key Resistance: $24.50
- Key Support: $20.00
Are Analysts Missing Key Signals Here?
Investors are looking ahead to the next earnings report on March 24.
- EPS Estimate: 31 cents (Up from 30 cents YoY)
- Revenue Estimate: $1.47 billion (Up from $1.28 billion YoY)
- Valuation: P/E of 24.2x (Indicates fair valuation)
Analyst Consensus & Recent Actions: The stock carries a Hold Rating with an average price target of $5.05. Recent analyst moves include:
- Wedbush: Underperform (Target $13.50)
- Wedbush: Underperform (Raised Target to $13.50)
- Wedbush: Underperform (Lowered Target to $10.00)
Valuation Insight: While the stock trades at a fair P/E multiple, the consensus and 3% expected earnings growth suggest analysts view this growth as justification for the current valuation.
Benzinga Edge Rankings
Below is the Benzinga Edge scorecard for GameStop Corp. Class A (GME), highlighting its strengths and weaknesses compared to the broader market:
- Momentum: Weak (Score: 8.94/100) — Stock is underperforming the broader market.
- Value: Strong (Score: 71.74/100) — Trading at a reasonable valuation relative to peers.
- Growth: Strong (Score: 96.24/100) — Indicates potential for future expansion.
The Verdict: GameStop Corp. Class A’s Benzinga Edge signal reveals a mixed outlook. While the Growth score suggests potential, the low Momentum score indicates that the stock is currently struggling to gain traction.
Top ETF Exposure
- VanEck Video Gaming and eSports ETF (NASDAQ:ESPO): 4.54% Weight
- AGF US Market Neutral Anti-Beta Fund ETF (NYSE:BTAL): 0.47% Weight
- SPDR S&P Retail ETF (NYSE:XRT): 1.54% Weight
Significance: Because GME carries significant weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.
Price Action
GME Price Action: GameStop shares were up 0.47% at $21.39 at the time of publication on Thursday, according to Benzinga Pro data.
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