Beating a Meme Stock at its Own Game ($GME)

Dec 11, 2021

GameStop changed the game in 2021. The trading game, at least.

Trader mentions of GameStop’s ticker symbol GME have increased more than 2,000% in 2021 versus 2020. And we’re talking a LOT of mentions.

Mention volume exceeded 135,000 on a single date in January this year in response to a Reddit- and meme-driven phenomenon pitting average investors against Wall Street behemoths, who were betting on GameStop going to $0.

But what does this mean for GameStop the company — especially ahead of a major earnings announcement?

1. The GameStop brand received a massive boost to consumer awareness levels.

Just check out GameStop’s consumer mention volume.

While levels have tempered since the pinnacle of 2021 madness, they remain +73% higher versus 2019.

2. This brand awareness has not created a long-term shift in consumer purchasing behavior… yet.

In 21Q2 GameStop shares traded down -7% following the company’s report, due to wider-than-expected losses.

While the company touted investments in its digital footprint (including the lease of a 530,000-square-foot fulfillment center in Reno that will help it fulfill online orders), LikeFolio data does not show meaningful traction — or at least enough to offset the in-store weakness.

Comprehensive mentions of purchasing something “in GameStop” or “from GameStop” dropped -22% YoY in the third quarter.

Much of this is due to the popularity surrounding new gaming console launches a year ago creating tough comps, but ultimately, there is no significant, material shift underway.

3. GameStop’s remaining consumer base DOES appear loyal.

As mention volume tapers, consumer demand has rebounded above pre-WallStreetBets levels: +10% YoY.

Tweets reveal a swath of consumers who state they only shop at GameStop.

While it’s important for a company to support its loyal base of users — and this may certainly help turn the tide on future reports — analysis suggested it wasn’t going to be enough this time.

You can see it clearly here, on our weekly Earnings Season Pass report.

And boy, were we right.

The Coin Flip Bearish trades netted a +133% gain.

Do we think GameStop is doomed? Not yet.

But that’s why it’s so valuable to be in touch with real-time consumer insights.

If GameStop begins to gain positive traction with consumers, LikeFolio members will be the first to know.

Andy Swan,
Founder, LikeFolio