Game Stop, Corp. (GME) is one of the biggest video game and consumer electronics retailers. The stock is currently trading around $40.04 around the middle of its 52 week range of $31.69-$46.59. The stock has been outperforming the market this year rallying 17.90% year to date. GME is scheduled to report earnings after the bell today, and the stock is rallying ahead of the release. GME is higher on the session by around $0.60 or 1.52% ahead of the closing bell.

Over the past 12 quarters GME has rallied on earnings day 7 times with an average move of 7.71%. Over the past 12 quarters GME has rallied from earnings to the nearest options expiration 7 times with an average move of 8.64%. The cloud seems flat going forward, not indicating conviction in either direction. Investors are looking to see how the closure of stores and foreign exchange headwinds will affect EPS. Other points to watch for are sales of previous generation consoles and the lack of new games being released lowering sales. In the previous quarter the release of new games such as Mortal Kombat drove sales, but investors wait to see how GME will be effected with no new game releases this quarter.

The options market is currently implying a move of around $2.5 or 6.25% in GME by this Friday’s close giving us an upside target around $42.50.

Andrew Keene

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