There’s good news if you’re betting your investment capital on video game retailer GameStop (NYSE:GME). The company’s financials are improving, and insider buying suggests strong confidence in GME stock. Be prepared for volatility along the way, but a share position in GameStop is likely to yield excellent returns by 2025.
The meme-stock traders might target GameStop for a short squeeze in 2023, but there are no guarantees that this will happen. Serious investors don’t need to rely on meme-stock rallies, though. There are valid, fundamentals-based reasons to expect GameStop to grow as a business and deliver value to the shareholders.
So, there’s no need to obsess over meme dreams and problems of the past. Instead, look toward a better future for GameStop as the company’s turnaround plan should keep anxious investors in the game.
GameStop Returns to Its Core Business
It’s understandable that GameStop’s management wanted to focus on digital/e-commerce sales for a while. After all, shifting to e-commerce seems to make sense in the 2020s.
Yet, it wasn’t necessarily the right path for GameStop as it didn’t produce the intended top-line results. Thankfully, GameStop’s management had the good sense to return the company to its core business. Going forward, GameStop’s management plans to shift their focus back onto the company’s brick-and-mortar locations.
Additionally, GameStop is enacting measures to cut its costs. This should help the company to stay profitable over the long term. As you may be aware, GameStop managed to flip from multiple quarters of net earnings losses to a net profit in 2022’s fourth quarter. Moreover, in a conference call, CEO Matt Furlong stated that GameStop had “considerable cash on hand, negligible debt, streamlined inventory and a path to full year profitability.”
Insiders Are Buying GME Stock
Apparently, Furlong isn’t the only GameStop insider that’s confident about the company’s future prospects. Last year, GameStop Chairman Ryan Cohen purchased 100,000 shares of GME stock. In addition, GameStop Director Alain Attal reportedly bought 1,500 shares of the company’s stock.
More recently, Director Larry Cheng purchased 5,000 shares of GameStop (or to be more precise, he did through Cheng Capital LLC). Prior to that, Cheng bought 4,000 shares of GameStop.
After the more recent purchase, Cheng owned an astonishing total of 44,088 shares of GME stock. Now, that’s what I would call supreme faith in the company. A number of big-money firms, including BlackRock (NYSE:BLK) and State Street (NYSE:STT), have also wagered sizable amounts of capital on shares of GameStop.
So, Here’s My GME Stock Price Prediction for 2025
Do the big bets of insiders and financial firms guarantee success for GameStop? Not necessarily, but they should instill some confidence in GameStop’s long-term investors.
Besides, GameStop’s pivot to profitability and re-emphasis on brick-and-mortar locations should bode well for the company. Therefore, while share-price volatility is practically inevitable, I fully expect GME stock to make a 2x move to $50 in 2025. Feel free, then, to consider a share position today in anticipation of brighter days ahead for GameStop.
On the date of publication, David Moadel 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.