GameStop Stock News and Forecast: GME backtracks after Thursday's 8% gain

GameStop stock has shed value on Friday alonside broad market.
Tesla cutting its prices in the United States has hurt its share price.
Bed Bath & Beyond stock has lost more than 5%.
Bank earnings results in the premarket were robust, but JPMorgan still expects a recession.

Clay Webster FXStreet

GameStop (GME) stock has given back 0.6% on Friday morning after advancing more than 8% on Thursday. The NASDAQ is trading 0.3% lower at the same time as all three major United States indices are in the red following bank earnings that offered a somewhat pessimistic outlook on the full year. GME stock opened lower at $19.88 on Friday but has steadily increased to $20.50 at the time of writing.

GameStop stock news: Banks offer solid results but dreary outlook

Two separate news items have started Friday's session off with a bit of pessimism in the coffee. First, Tesla (TSLA) cut the price tag on a number of its models, which typically only happens when a company is worried about demand holding up. Despite many commentators saying the price cut was simply necessary to meet federal tax refund requirements, the policy mirrors Tesla's price cuts in China last year that were launched in order to deal with drooping sales.

Second, a half dozen major banks all reported earnings results for the final calendar quarter of 2022 before the market opened on Friday. While most banks surpassed their consensus estimates from Wall Street, JPMorgan gave a full-year outlook that showed CEO Jamie Dimon's bearish view still holds sway at the bank despite Q4's successful performance. Bank of America and Bank of New York Mellon also seemed slightly wary when projecting full-year forecasts. It seems that interest income is soaring at many banks, but fees from investment banking and asset management are falling.

Then there is Bed Bath & Beyond's (BBBY) 4-day, 300% rally (exactly 300%, actually!) that appears destined to end its streak on Friday. BBBY stock is down more than 6% at the time of writing. Shares of the home goods retailer exploded this past week even though talk of bankruptcy grows ever larger. As a bona fide meme stock, GME is following in BBBY's footsteps lower.

Overall, the outlook for GameStop appears to offer upside at the start of 2023. Over the past 90 days the average analyst estimate for full-year earnings at GameStop has risen 7%, always a good sign. Adam Aron's AMC Entertainment (AMC) also found itself foundering on Friday, so once again meme stocks are trading the same directionally.

GameStop stock forecast

The main levels to watch at the moment for GME stock are $20 and $22. A close below $20 on Friday should lead to a bearish view from traders. Meanwhile, a close above $22 would likely give bulls a reason to jump back in. The price target would then evolve to the supply zone between $26.80 and $28.70 that largely kept GME stock grounded from September 2022 through early December. A break above that region would allow bulls to once again test the October 31 Halloween range high of $35. For now short-term support sits at $16.

GME daily chart

Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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