CNBC’s Jim CramersaidWednesday that whileGameStop Corp.’s recent quarterly results were “about as good as anyone could’ve reasonably expected,” he believes the video game retailer remains overvalued.
What Happened: On Tuesday, GameStopreportedfourth-quarter results that missed analysts’ estimates, while its e-commerce business registered a year-over-year increase of 175%. This was the company’s first quarterly results after its Reddit-fueled stock price surge since January.
“I’m much more of a believer than I was yesterday, but I also think you’re taking your life in your hands if you buy the stock up here. Let it sink to the mid-double digits, then I’ll get back to you,” Cramer, the host of CNBC’s Mad Money, said.
Cramer added that buying GameStop’s stock now would be like betting that the company’s major shareholder and Chewy Inc.CHWY 0.03%co-founder Ryan Cohen’s plan to transform the brick-and-mortar retailer into a technology business will be “wildly successful.” He noted that the stock could have rallied following the release of the quarterly results if it was trading at $30 or less per share.
Cramer also criticized GameStop’s management for not providing an outlook or details about the company’s transformation plan.
Why It Matters:Shares of GameStop and other heavily-shorted stocks such asAMC Entertainment Holdings Inc.AMCskyrocketed in January as retail traders belonging to the Reddit Investor forum r/WallStreetBets bid up the stocks to create a short squeeze. GameStop’s stock has soared about 870% since its previous quarterly results last December.
GameStopdisclosedTuesday it may sell additional equity shares as it seeks to capitalize on the stock surge this year.
Price Action:GameStop shares tumbled almost 34% on Wednesday to $120.34, but rose almost 7.4% in the after-hours session.