GameStop Corp (GME) Stock: Insiders Go All In as Share Price Soars

GameStop Corp (GME) Stock: Insiders Go All In as Share Price Soars

TLDR:

• Directors Alain Attal and Larry Cheng recently purchased additional GameStop shares
• CEO Ryan Cohen bought 500,000 shares last week, increasing his stake to 8.4%
• GameStop added Bitcoin to its investment policy as a treasury reserve asset
• Company completed a $1.3 billion convertible senior notes offering plus $200 million option
• Stock is up 132% over the past 12 months despite facing retail challenges

GameStop Corp (GME) is seeing renewed investor interest after key company insiders purchased more shares. The latest moves follow a pattern of insider purchases that have helped push the stock higher in recent weeks.

On Thursday, Lead Independent Director Alain Attal bought 10,000 shares at $25.75 each. This $257,500 investment brought his total stake to 572,464 shares, according to an SEC filing.

Director Larry Cheng also increased his position on the same day. He purchased 5,000 shares at $21.54 each, bringing his total stake to 83,000 shares.

These purchases came just one week after Chief Executive Ryan Cohen bought 500,000 shares at $21.55 each on the open market. Cohen’s purchase increased his total stake to 37,347,842 shares, representing about 8.4% of outstanding shares.

Recent Financial Moves

GameStop has made several key financial decisions in recent weeks. The company added Bitcoin to its investment policy as a treasury reserve asset, joining the growing list of companies exploring cryptocurrency investments.

The video game retailer also announced and completed a private offering of $1.3 billion in convertible senior notes. GameStop exercised an option to purchase an additional $200 million aggregate principal amount of notes.

These convertible notes, due in 2030, will not accrue interest or principal. The company plans to use the proceeds for general corporate purposes, including investments in Bitcoin.

The news has helped support GameStop’s stock price. Shares are up 2% in premarket trades after ending Thursday’s session down 1.5%. The stock has gained 132% over the past 12 months.

Analyst Perspectives

Wall Street has mixed views on GameStop’s recent moves. Wedbush Securities raised their price target to $13.50 from $11.50 while maintaining an Outperform rating, citing the convertible notes offering details.

However, Wedbush also expressed skepticism about GameStop’s Bitcoin investment strategy. They questioned the rationale behind the premium on its shares.

Baird analysts maintained a neutral stance on GameStop. They noted the company’s efforts to reduce store count and modernize the shopping experience, while focusing on collectibles and trading cards.

GameStop’s financial health metrics show some positive signs. The company maintains more cash than debt and has a strong current ratio of 8.05, according to InvestingPro data.

Meme Stock Legacy

GameStop was a major beneficiary of the 2021 meme-stock frenzy, which sent its shares skyrocketing. The company has tried to capitalize on that momentum while addressing its core business challenges.

The retailer has struggled with declining sales in recent years. It faces intense competition from digital gaming and streaming services that have changed how consumers purchase and play games.

GameStop’s stock got a boost last year with the return of influential trader Keith Gill, also known as Roaring Kitty, to social media. Gill, a key figure in the 2021 meme-stock explosion, described himself as a GameStop “believer” in his first YouTube livestream in three years.

The lack of interest payments on the convertible notes until maturity has raised some concerns about GameStop’s debt management strategy. Some investors worry about potential share dilution from these notes.

GameStop’s management has been recognized for shifting toward more effective cash and investment management. This includes their recent moves to evaluate Bitcoin-related opportunities.

The company has seen mixed success in new ventures. They’ve had some achievements in the trading card sector but limited traction in the NFT marketplace.

GameStop continues to navigate the evolving retail landscape while trying to modernize its business model. The recent insider purchases suggest company leadership maintains confidence in its future.

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