GME stock continues in a strong downtrend on January 24, 2022, in the wake of the Microsoft buyout of Activision news. Investors appear to be concerned that Microsoft’s streaming GamePass service for $15 a month will eventually eliminate brick and mortar GameStop stores. This makes sense as it’s what happened with Netflix’s streaming movies platform eventually eliminating video rental stores. Indeed, Microsoft’s GamePass is being called the Netflix of gaming.
GameStop price target lowered to $100 from $145 at Jefferies
On January 19, 2022, Jefferies analyst Stephanie Wissink lowered the firm’s price target on GameStop (GME) to $100 from $145 and keeps a Hold rating on the shares, telling investors that Microsoft’s (MSFT) acquisition of Activision Blizzard (ATVI) changes the scope of key inputs into her model given that both companies are key vendors to GameStop. The “game changer” combination of those two could reshape volumes for Activision titles if made exclusive to Xbox and “portends a more rapid transition to cloud-driven IP gaming,” Wissink argues.
Many ways to play Microsoft, Activision Blizzard deal, Barron’s says
Microsoft (MSFT) announced on Tuesday, January 18, 2022, that it had agreed to buy Activision Blizzard (ATVI) in an all-cash deal valued at nearly $69 billion, and speculation sparked a rally in shares of Electronic Arts (EA) Take-Two Interactive (TTWO), Eric J. Savitz writes in this week’s edition of Barron’s. For investors, there are multiple ways to play the merger. Anyone convinced the deal will go through can buy Activision shares. But there’s plenty of risk, and the potential reward is capped by the deal price, limiting upside to about 15%, the author notes. Investors can also bet on the potential of additional consolidation by buying shares of takeover candidates like EA, Take-Two, and the other game publishers that rallied this past week, Savitz contends. Shares of mobile videogame maker Zynga (ZNGA) soared earlier this month after Take-Two said it was buying the company for $12.7 billion. But the better, less speculative bet is Microsoft itself, he argued, adding that the stock has been a laggard over the past few months, but seems well-positioned for double-digit earnings growth as far as the eye can see. Source: https://www.barrons.com/articles/microsoft-activision-merger-stocks-to-buy-51642812149?mod=past_editions
One way that Barron’s didn’t mention to play the Microsoft, Activision deal, is to short GME stock as we are currently seeing take place as of Jannuary 24, 2022.
📺 Xbox Game Pass Ultimate 2021 Review – Worth Your Money?
[embedyt] https://www.youtube.com/watch?v=IGme-KXYGrE[/embedyt]📉 GME Stock Technical Analysis
The short term trend is negative, as is the long term trend. GME is part of the Specialty Retail industry. There are 115 other stocks in this industry. GME outperforms 73% of them. GME is currently trading in the lower part of its 52 week range, which is not a good signal. Agreed, the S&P500 Index is also not doing fantastic, but it still sitting in the middle of its 52 week range. Prices have been falling strongly lately, it is better to avoid new long positions here.
There is a resistance zone ranging from 106.35 to 106.37. This zone is formed by a combination of multiple trend lines in multiple time frames. There is also resistance at 208.19 from a trend line in the weekly time frame.
The technical rating of GME is bad and it also does not present a quality setup at the moment. GME stock has a Setup Rating of 2 out of 10. Prices have been extended to the downside lately. For a nice entry it is better to wait for a consolidation. Click here to sign up for email alerts on when GME stock consolidates and has a Setup Rating of 8 or better.
