GameStop's stock has been in a downward spiral since the meme stock frenzy subsided. The company's business model, which relies on a niche after-market business, has failed to produce sustainable growth or profitability. GameStop's recent quarterly report revealed a decline in revenue, hardware sales, and software sales. The company's cash flow was negative for the year, resulting in a decline in cash and equivalents.
Despite a positive margin, GameStop's earnings are insufficient to offset its annual loss. The company's next three quarters are expected to show sustained contraction, leading to a continued loss of cash. GameStop's lack of commentary or guidance on its future prospects is concerning.
Institutional interest in GameStop is low, and short interest is increasing. The stock's price action is in a downtrend, with strong resistance at the 150-day and 30-day EMAs. If the stock falls below $12.18, it may quickly hit the $5 level.