Why GameStop Is Jumping 10% Higher Today
What happened
Shares of GameStop (NYSE: GME) were jumping 9.5% higher in midday trading Wednesday after the video game retailer was added to a "best ideas" list by a retail analyst at Hedgeye.
So what
GameStop is in turnaround mode and riding the video game console upgrade cycle as it figures out how best to respond to the digital transition of gaming.
Image source: Getty Images.
It's also getting pressure from activist investors who want to see the retailer lean more heavily into the online market while downplaying its physical retail business. RC Ventures recently disclosed it had increased its stake in GameStop to 13% and was interested in working with management to increase shareholder value.
Now what
Although RC Ventures has adopted a conciliatory tone at the moment, it wasn't all that long ago it was berating management for its failures. Even now it says it is willing to use a stick if the carrot approach doesn't work.
Hedgeye analyst Brian McGough says if GameStop successfully makes a U-turn and becomes "the leading store and online destination for the gaming community, you could have a stock at $50+."
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Rich Duprey has no position in any of the stocks mentioned. The Motley Fool recommends GameStop. The Motley Fool has a disclosure policy.
