Traders Purchase Large Volume of GameStop Call Options (NYSE:GME)

Key Points

• GameStop call-option activity surged: Investors purchased 245,499 call options, 58% above the stock’s typical daily call volume.
• Trading and ownership signals were mixed: Several institutional investors increased or initiated positions, while insiders sold 18,125 shares worth about $406,587 over the past three months.
• Analysts remain cautious despite an earnings beat: GameStop reported $0.27 EPS and $790.2 million in revenue, but revenue fell 18.7% year over year; the analyst consensus remains “Hold,” and the stock closed at $20.00.

GameStop Corp. (NYSE:GME - Get Free Report) saw unusually large options trading on Wednesday. Investors acquired 245,499 call options on the stock. This is an increase of 58% compared to the typical daily volume of 155,655 call options.

Insiders Place Their Bets

In other GameStop news, insider Daniel Moore sold 7,085 shares of GameStop stock in a transaction dated Wednesday, July 1st. The stock was sold at an average price of $22.38, for a total transaction of $158,562.30. Following the completion of the transaction, the insider owned 115,125 shares in the company, valued at approximately $2,576,497.50. This trade represents a 5.80% decrease in their position. The transaction was disclosed in a filing with the SEC, which is accessible through this link. Also, General Counsel Mark Robinson sold 3,957 shares of the business's stock in a transaction dated Monday, July 6th. The shares were sold at an average price of $22.62, for a total value of $89,507.34. Following the completion of the transaction, the general counsel directly owned 104,190 shares of the company's stock, valued at approximately $2,356,777.80. This trade represents a 3.66% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last three months, insiders have sold 18,125 shares of company stock valued at $406,587. Company insiders own 9.50% of the company's stock.

Institutional Trading of GameStop

A number of hedge funds and other institutional investors have recently modified their holdings of the stock. WINTON GROUP Ltd purchased a new stake in shares of GameStop in the 2nd quarter valued at approximately $5,111,000. Sterling Investment Advisors Ltd. raised its position in shares of GameStop by 33.8% during the 2nd quarter. Sterling Investment Advisors Ltd. now owns 18,316 shares of the company's stock valued at $404,000 after buying an additional 4,627 shares during the period. VIRGINIA RETIREMENT SYSTEMS ET Al purchased a new stake in shares of GameStop during the 2nd quarter valued at approximately $1,866,000. California State Teachers Retirement System lifted its holdings in GameStop by 2,043.5% in the second quarter. California State Teachers Retirement System now owns 10,573,648 shares of the company's stock valued at $233,466,000 after acquiring an additional 10,080,362 shares during the last quarter. Finally, AlphaGrep UK Ltd acquired a new position in GameStop in the second quarter valued at approximately $708,000. 29.21% of the stock is owned by institutional investors and hedge funds.

Analysts Set New Price Targets

A number of analysts recently issued reports on the stock. Weiss Ratings reissued a "hold (c)" rating on shares of GameStop in a report on Wednesday, July 29th. Wall Street Zen cut shares of GameStop from a "buy" rating to a "hold" rating in a report on Monday. One research analyst has rated the stock with a Hold rating, According to data from MarketBeat, the company presently has a consensus rating of "Hold".

GameStop Price Performance

GME stock traded up $1.11 during mid-day trading on Wednesday, reaching $20.00. 15,386,449 shares of the company's stock were exchanged, compared to its average volume of 7,055,185. The company has a debt-to-equity ratio of 0.71, a current ratio of 12.40 and a quick ratio of 11.91. GameStop has a 12-month low of $17.79 and a 12-month high of $28.10. The stock's 50 day moving average is $20.16 and its 200 day moving average is $22.04. The company has a market cap of $8.97 billion, a price-to-earnings ratio of 15.15 and a beta of 1.72.

GameStop (NYSE:GME - Get Free Report) last posted its quarterly earnings data on Tuesday, September 8th. The company reported $0.27 earnings per share (EPS) for the quarter, meeting the consensus estimate of $0.27. GameStop had a net margin of 20.45% and a return on equity of 13.75%. The business had revenue of $790.20 million for the quarter, compared to the consensus estimate of $756.85 million. During the same period last year, the firm posted $0.31 earnings per share. The company's revenue was down 18.7% compared to the same quarter last year.

More GameStop News

Here are the key news stories impacting GameStop this week:

• Positive Sentiment: GameStop reported adjusted EPS of $0.27, exceeding one cited consensus estimate of $0.19 and matching another estimate of $0.27. Revenue reached $790.2 million, above expectations of approximately $756.8 million. GameStop beats second-quarter estimates on collectibles
• Positive Sentiment: Collectibles revenue reportedly jumped 57%, highlighting a higher-growth business that could help offset pressure in GameStop’s core video-game operations and support the bullish case for a broader company transformation. GameStop earnings and the bullish case
• Positive Sentiment: Director Lawrence Cheng bought 55,000 shares for approximately $1.03 million at an average price of $18.80, increasing his direct ownership by 62.5%. The purchase may signal insider confidence in GME’s valuation or strategy. Lawrence Cheng purchases GameStop shares
• Neutral Sentiment: Investors are watching how Chairman Ryan Cohen deploys GameStop’s multibillion-dollar cash reserves. Possible acquisitions or strategic transactions, including speculation involving eBay, could materially affect the stock, but no deal was confirmed in the reports. GameStop’s next big move
• Negative Sentiment: Despite the earnings beat, quarterly revenue declined 18.7% year over year to $790.2 million, while EPS fell from $0.31 to $0.27. The figures indicate that profitability improvements have not yet translated into overall sales growth. GameStop quarterly earnings results
• Negative Sentiment: Analysts remain cautious: Wall Street Zen downgraded GME from “buy” to “hold,” and the average analyst view is “hold.” Commentators also warned that collectibles growth or one-time gains could be masking continued weakness in the traditional gaming business. GameStop earnings outlook

About GameStop

GameStop Corp. NYSE: GME is a global specialty retailer focused on video games, gaming consoles, consumer electronics and related accessories. The company operates a network of physical retail stores alongside an e-commerce platform, offering new and pre-owned products spanning the latest game software, hardware, collectibles and lifestyle merchandise. GameStop's retail footprint is complemented by digital marketplaces for trade-ins and online purchases, as well as a membership program that provides exclusive content and rewards.

Originally founded in 1984 as Babbage's in Dallas, Texas, the company adopted the GameStop name in 1999 following its merger with Software Etc.

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