According to analyst Curtis Nagle, an analyst at BofA Securities, investors expect the shares of GameStop Inc. get a boost so that the latest payments of government incentives reach the bank accounts will be disappointed.
Nagle wrote in a research note Friday that, in collaboration with BofA’s predictive analytics group, it analyzed the potential impact on GameStop’s GME shares,
of the $ 1,400 stimulus payments currently being made.
Looking at online forums like Reddit, Nagle said previous sharp increases in the number of stimulus-related conversations and GameStop (GME) seemed to coincide with large price gains. But in the future, Nagle, who is a bassist on GameStop stocks, said he believes no positive effect of the “stigmas” has been played out.
“[W]I think the future impact may be limited given two factors, ”Nagle wrote in a note to clients.
• “Conversations [sic] it seems that the stimuli involved have reached their maximum and GME’s actions have decreased in recent days. “
• “The number of recent conversations, including GME and stimuli, is low.”
BofA Global Research, ListenFirst
Nagle also noted that GME’s trading volumes have also been steadily declining and that short interest rates have fallen “materially”. Nagle reiterated his lower stock score and the $ 10 target price.
Trading volume averaged 34.5 million shares daily between March and Thursday, after averaging 43.6 million shares daily in February and 66.4 million shares in January, according to a MarketWatch analysis of FactSet data.
FactSet, MarketWatch
And the latest available exchange data showed that short interest as a percentage of the public stock market was 26.1%, compared to more than 100% when the Reddit-induced trading frenzy began in mid-January. .
Shares of GameStop fell 6.7% in morning trades and have fallen 29.1% this week. This puts stocks on track to achieve a three-week winning streak that shot up 551.6%, followed by a three-week losing streak that dropped 87.5%.
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Instead of buying stocks, it seems increasingly likely that the current $ 1,400 of incentives and other disposable money will be spent elsewhere.
Read more: Student Loans, Charity Bills, and Pet Bills: This is what readers will do with their $ 1,400 stimulus checks.
“Although we have not surveyed consumers about how much they intend to invest in the stock market in the future, in our latest work-from-home survey, respondents expect to increase spending over the next twelve months on restricted activities for COVID-19, including holidays, restaurants and travel, as well as investments and home decor, ”wrote Nagle.
Despite this week’s decline, GameStop shares have continued to rise 1,105.0% over the past three months, while the S&P 500 SPX index,
has increased by 5.4%.