GameStop Is Still "Swimming Naked," Despite the Passion of Meme-Stock Investors
Warren Buffett has famously said, "you don't find out who's been swimming naked until the tide goes out." To that end, the 57% drop in its stock price since November 2021 may be a clear indication that GameStop (NYSE: GME) is offering up a sight that isn't suitable for a younger investor audience.
GameStop stock has been the poster boy for the meme stock phenomenon and it has benefitted from it greatly over the past two years. Outsized investor interest has helped push the stock price to levels at which the company's board felt it could justify a stock split. Still, the performance of its business lines during this time should be leading stockholders to question whether they should continue to rely on the momentum of this retail stock, or get out.
GameStop's deteriorating business model made it not much better than a penny stock by the fall of 2020 as investors feared the company would disappear amid online competition. Many institutional investors shorted the stock on that premise.
Source Fool.com