GameStop stock price fell sharply on Friday after generating massive gains early in the week. The shares of video gaming company are up more than 60% in the last month alone, accelerating the twelve months gains to 140%. Its partnership with Microsoft is the biggest factor behind the gains.
The latest selloff is blamed only on the trader’s strategy of capitalizing on recent gains. The tug of war between bulls and bears is adding to the price volatility and trader’s sentiments. GameStop stock price dropped to $12 after touching $13.50 a share last week.
Critics have started raising questions on the Microsoft deal. Benchmark is among the bears who strongly criticized the latest bull-run.
“We believe the substance in the press release was hollow; the stock was halted, $0 deal math was offered and there was no investor conference call… We suspect Microsoft is taking advantage of GameStop’s desperation, forcing them to share in subscription sales as their core market evaporates.” warns analyst Mike Hickey said.
Bulls, on the other hand, are praising the timely deal ahead of the Xbox series X launch next month.
Jefferies says the deal would enhance GameStop revenue base to the gamer level. The company was previously seeking to generate revenue from products sold and content.
Last week, GameStop announced a new deal with Microsoft to standardize it’s all business operations on cloud solutions. The gaming company says the deal will improve its digital and physical product portfolio in video gaming markets.
On the other hand, GameStop stock is lacking support from the financial numbers. It has generated a 27% year over year drop in the latest quarterly revenues while loss per share stood around $1.40. The company expects third-quarter revenue in the range of $1 billion, indicating a double-digit decline from the past year period. The consensus for loss per share is around $0.85.