GameStop’s (GME) expansion in North America is gathering pace. The specialty retailer of games and entertainment products has entered into a lease agreement for a 530,000 square foot facility as it looks to expand its North American fulfillment network.
Reno, Nevada, is home to the new facility scheduled to come into operation in 2022. Setting up a base in Reno is part of the company’s push to position its growing product offerings as it seeks to enhance shipping across the west coast.
Expansion into Nevada comes on the heels of GameStop entering into a lease agreement for a 700,000 square foot facility as it also moves to expand its footprint in York, Pennsylvania. (See GameStop stock chart on TipRanks)
GameStop raised about $1.13 billion in June by selling up to 5 million shares in the open market. The specialty retailer will use the funds for general corporate purposes as it moves to finance growth initiatives. The capital raised should also shore up the balance sheet.
Last Month, Wedbush analyst Michael Pachter reiterated a Sell rating on the stock with a $50 price target, implying 74.9% downside potential to current levels. While the company has made major changes to its board of directors and leadership, the analyst does not believe the new team has articulated a roadmap for transforming the company.
“Nobody is shorting GameStop because I said so…They’re shorting GameStop because they believe it’s fundamentally worth $40 or $50, not $200. They don’t need me to tell them that.” Pachter says.
Consensus among analysts is a Moderate Sell based on 1 Buy, 2 Holds, and 3 Sells. The average GameStop price target of $88.33 implies 55.74% downside potential to current levels.
GME scores a 4 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to perform in line with market averages.
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