CHWY - Could It Finally Be Time To Step Up to The Plate With GME Stock?
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After eleven or so months you may be done with GameStop (NYSE:GME). And these days that’s increasingly the case for GME stock and its former army of bears.
But is the observable victory for bulls really good news for would-be GME stock investors other than apes still playing games in shares?
GameStop, or at its not-so-humble beginnings back in January, “Gamestonk!!??” has come a long ways. And depending on whom one asks, that could be for better or for worse.
Short interest in GME stock betting against the one-time brick-and-mortar retail video game champ has plummeted. And regardless of the source, that’s not fake news, it’s a fact.
In January, bearish bets amassed to 1.4x GME stock’s float amid 2021’s inaugural meme-stock short-squeeze at the hands of retail marauders known as Reddit’s r/WallStreetBets.
Fast forward and today short interest in GME stock stands at just 11% or $1.3 billion.
And to be honest, GameStop’s bear stat now mostly resembles Triple or even Double-A ball rather than the big leagues headlined right now by Cortexyme (NASDAQ:CRTX) and its shorted float of nearly 40%.
Yet, while it’s fair to say the playing field has been leveled of bears, is GME stock worth stepping up to plate as a bullish investor?
GameStop’s Bullpen Ain’t Very Deep
At the moment the scouting report is coming back with some troubling findings for GME stock fans.
Bearishly, once-heralded Chewy (NYSE:CHWY) wunderkind Ryan Cohen has turned into a memelord for the Reddit crowd rivaling AMC Entertainment’s (NYSE:AMC) well-watched, popcorn pandering Adam Aron.
In a nutshell, the activist investor-turned-GameStop chair can be found keeping busy with outlandish social media posturing that caters almost exclusively to the Reddit crowd.
And all the while, a once touted roadmap for GME stock’s e-commerce driven turnaround remains M.I.A.
There’s also the sudden exit of former Amazon (NASDAQ:AMZN) exec and GME’s Chief Operating Officer Jenna Owens at the end of October.
Ms. Owens was plucked earlier this year from the tech behemoth as part of a celebrated coup for Ryan’s promise to make GameStop the “Amazon of gaming.”
For now, the unclear separation agreement further muddies the waters regarding a GameStop 2.0 pivot. And concerningly, with a big leagues style market cap of $16 billion, relegation back into the minors is an inevitable certainty.
GME Stock Weekly Price Chart
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The good news is the scouting report on GME stock can’t be said to be a lost cause entirely.
Vis-à-vis this year’s secondaries, GME stock does have cash at its disposal instead of an unmanageable pile of debt. And theoretically that gives Ryan breathing room to still execute. Right?
Also, if the scoreboard reflected a ninth inning, it may as well be a game over situation for GameStop. Reasonably, the bears would be taking to the field and shorting GME en masse. But they’re not.
There’s also GME stock’s price chart to be upbeat about.
I’ll be the first to admit, my last at-bat in October discussing GME stock was a strike. Today shares have regrouped and are favoring upside in the short-term.
Technically and behind the upbeat assessment, stochastics and price action on the weekly chart are both in bullish alignment with higher-high and higher-low patterns since August.
Further and today, GME stock has digested this month’s early gains and relative high by constructing a healthy-looking inside candlestick consolidation.
And short-term, or rather the next inning or two, bulls are positioned to profit from a nice price pattern.
To suit up as a bull and play the game more smartly, off and on the price chart, the January $230/$250 call spread looks like a risk-adjusted winner.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
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