GameStop Corp. (GME): what the price requires
At today's price, GameStop Corp. (GME) is priced for +18.4% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-19 · Source: https://boothcheck.com/report/GME
Headline
| Field | Value |
|---|---|
| Ticker | GME |
| Company | GameStop Corp. |
| Current price | $21.99/sh |
| Composition | Hardware and accessories 51% / Software 20% / Collectibles 29% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 6.9% |
| Operating margin today | 7.1% |
| Margin compression implied | -0.2pp |
| Implied growth | 18.4% |
| Multiple paid | 24x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.7% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.6pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.96σ |
| cohort percentile (of 212 peers) | 66 |
| sustained it ~5 years at this level | 40% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by earnings-power and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.34x | 5 | expensive |
| Earnings | 1.21x | 4 | expensive |
| Relative | 1.37x | 5 | expensive |
| Growth | 0.95x | 3 | justifies |
Families that justify the price: Earnings, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.9%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $35.81 | 0.61x | yes | FCF base $0.7B, growth 4% (input: historical growth), terminal g 4.0%, WACC 7.9%, 5yr projection |
| DCF Exit Multiple | Growth | $23.14 | 0.95x | yes | Exit EV/EBITDA: 24.1x / 26.1x / 28.1x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $21.64 | 1.02x | yes | P/E 20x (static sector reference · 2026-04), scenarios: 16.8x / 20.0x / 23.2x (bear / base = reference held flat / bull), EV/EBITDA 17.62x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $13.93 | 1.58x | yes | BV/sh $9.86, ROE (TTM) 13.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $16.41 | 1.34x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $15.80 | 1.39x | yes | Rev $3.7B, growth 4% (input: historical growth; tapered), Terminal P/S: 2.9x / 3.5x / 4.1x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $16.08 | 1.37x | yes | EPS $1.34, growth 2% (input: historical EPS growth), PEG=8.54 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $16.94 | 1.30x | yes | BV $9.86 + 5yr PV of (ROE (TTM) 13.1% − Kₑ 9.3%) × BV; BV grows 8.5%/yr |
| Graham Number | Asset | $17.24 | 1.28x | yes | √(22.5 × EPS $1.34 × BVPS $9.86) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $14.11 | 1.56x | yes | EBITDA $0.39B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $18.50 | 1.19x | yes | FCF $740.6M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $17.96 | 1.22x | yes | SBC-adj FCF $0.71B (FCF $0.74B − SBC $0.03B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $43.24 | 0.51x | yes | EPS $1.34 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $4.78 | 4.60x | yes | BV $9.86 × (ROIC 3.8% / WACC 7.9%) |
| P/Sales Sector | Relative | $9.45 | 2.33x | yes | Revenue $3.73B × sector P/S 1.5x |
| PEG Fair Value | Relative | $50.25 | 0.44x | yes | EPS $1.34 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $14.49 | 1.52x | yes | EPS $1.34 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $4.2b |
| Net debt / NOPAT (after-tax) | -22.75x (net cash) |
| Net debt / operating income (pre-tax) | -17.50x (net cash) |
| Share count CAGR (dilution) | 18.2% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- The balance sheet is the whole story. GameStop held about $9.7 billion of cash, marketable securities, and digital assets at the close of the first quarter against a roughly $21.49 (as of June 27, 2026) share price, so a large slice of the market value is the treasury rather than the store business.
- The first quarter set company records: net income of $389.6 million and operating income of $143.3 million, with net sales up 14% to $835.3 million, driven by collectibles, which reached $348.9 million, or about 42% of revenue.
- At today's price the market pays roughly 23x company-wide operating income, a multiple that needs the collectibles momentum to persist for years and the bitcoin treasury bet to work, not just the cash to sit there.
Bull Case
Start with the loudest objection: this is a declining mall retailer of physical games, and the secular shift to digital downloads is not reversing. That fear is real, but the recent data does not support the idea that the business is collapsing on schedule. In the quarter ended May 2, 2026, net sales rose 14% year over year to $835.3 million, and the company posted the highest first-quarter operating income in its history at $143.3 million and record net income of $389.6 million. The growth is not coming from the dying part of the business; it is coming from collectibles, which generated $348.9 million, nearly 42% of revenue. The market is pricing a melting ice cube, and the quarter showed a company that is mixing toward a higher-margin, faster-growing category. That undercuts the simplest bear thesis.
The capital base is the second pillar and it is unusual. At quarter-end GameStop held roughly $9.7 billion of cash, marketable securities, digital assets, and related collateral, including about $8.4 billion of cash and securities and roughly $0.4 billion in digital assets. Against a market value far smaller than that figure once you net it out, the operating business is being assigned a modest multiple while a very large cash and securities pile sits behind it. The company's own SEC filing confirms the treasury experiment is deliberate: the board "approved the addition of Bitcoin as a treasury reserve asset, whereby a portion of our cash or future debt and equity issuances may be invested in Bitcoin" with no maximum amount set (FY2025 10-K, accession 0001628280-25-014731). That is an optionality the multiple does not fully credit.
Capital allocation closes the loop. On June 2, 2026, the board approved a discretionary $2.0 billion share repurchase authorization running through June 2029, and the company guided to fiscal 2026 adjusted EBITDA in excess of $600 million, up sharply from $345.4 million in fiscal 2025. A company that is buying back stock, growing its highest-margin category, and guiding to a near-doubling of adjusted EBITDA is not behaving like the terminal-decline story the bears describe. If the collectibles ramp holds and the treasury is even neutral, the earnings-power and asset methods both support a value near or above the current price.
Bear Case
The bear case begins with the capital structure, because that is where the fragility hides behind a comforting cash number. GameStop reports net cash, but it carries about $4.16 billion of gross debt against its cash, and a meaningful part of that is convertible paper raised specifically to fund the treasury strategy. The "cash hoard" is therefore partly borrowed, and the share count has been climbing: dilution has run at roughly a 10% annual pace on the full-window basis, and equity raises were the mechanism that built the war chest. A balance sheet that looks like a fortress on the net line is, on closer inspection, a leveraged bet financed by issuing stock and convertibles into the company's own enthusiasm. That structure is durable in calm markets and brittle in a drawdown, because the asset side now includes bitcoin, which can fall faster than the debt that helped buy it.
The operating economics still do not justify the price on their own. Strip the treasury out and the core retail business earns a trailing return on invested capital near 4%, below its cost of capital, which means the stores are not, by themselves, value-creating at this price. The valuation X-ray shows most asset and earnings methods landing well below the market: the excess-return models near $14 to $17, the sector price-to-sales method near $9, and the ROIC-justified book method near $5, all against a price above $21. The methods that reach the price lean on aggressive growth or treasury credit, not on the demonstrated earning power of selling hardware and software.
The external read is skeptical and the strategy adds risk rather than removing it. Analyst consensus targets cluster in the mid-teens to roughly $18, below the current price, and the stock trades around 19x forward adjusted earnings and 2.5x sales, both above sector norms, so the market is already paying a turnaround premium. The bitcoin position introduces a volatile asset whose price swings can dominate quarterly results and whose accounting can whipsaw reported income. The unsolicited bid for eBay, pursued after rejection, raises a governance question about how the cash will ultimately be deployed. The downside is not that the company runs out of money soon; it is that a large, partly borrowed treasury, a still-marginal core, and a leadership willing to make outsized bets can compress the premium the market is currently extending.
Valuation
The methods scatter widely, and the scatter is the point. Group them. The earnings-power family lands in a band: a free-cash-flow-yield method near $18.50, an earnings-yield method near $14.50. The asset family clusters lower, with the two excess-return models at roughly $14 and $16, residual income near $17, and the Graham number near $17. The relative family straddles the price, with a sector P/E method right at the $21.56 mark and price-to-sales far below near $9. A handful of growth-leaning methods reach much higher, but they require the collectibles growth to compound for years. The blended central read sits near $16, below the current price.
The inverted view ties it together. At about $21.49 the price values the whole company near 23x operating income at a roughly 8.5% cost of capital. That embeds an assumption of mid-teens operating-profit growth sustained over a five-year stage, which is within the range of what the company has recently delivered on the collectibles ramp but is not a low bar. In plain terms, the price already credits a good deal of the turnaround.
The honest framing is that this is two assets bolted together: a slow-to-marginal retail core and a very large, partly borrowed treasury that now includes bitcoin. The methods that anchor to the operating business say the stock is expensive; the ones that credit the cash and the growth say it is fair. The price you accept depends on how much value you assign to a treasury strategy with no stated ceiling and a core that, on its own returns, does not yet clear its cost of capital.
Catalysts
The clearest near-term driver is execution on collectibles, which reached $348.9 million and about 42% of revenue in the first quarter; sustaining that mix shift is what the elevated multiple requires. Capital returns are a standing catalyst: the board approved a discretionary $2.0 billion repurchase authorization on June 2, 2026, running through June 2029, so buyback activity against the large cash position will be watched closely. Guidance is a second lever, with management targeting fiscal 2026 adjusted EBITDA above $600 million versus $345.4 million in fiscal 2025, a near-doubling that the next prints must validate. The bitcoin treasury is a two-sided catalyst: gains or losses on the roughly $0.4 billion digital-asset position can swing reported results, and any change in the policy, which the company's filing notes has no maximum accumulation amount, would move sentiment. Strategic moves are the wildcard, with the company continuing to pursue an unsolicited bid for eBay after a rejection, an outcome that would reshape how the cash is deployed. Sentiment remains cautious, with analyst targets clustered below the current price in the mid-teens to roughly $18, so an in-line collectibles quarter would do little to close that gap while a beat could force target revisions.
Sources: Yahoo Finance, GameStop IR, MarketBeat short interest, Public.com forecast
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- BBY (BEST BUY CO., INC.)
- FY2025 10-K: …affects our revenue and profitability. While we constantly strive to offer consumers the best value, the retail sector is highly competitive. Price is of great importance to most customers, and price transparency and comparability continues to increase. Digital technology enables consumers to compare prices on a…
- FY2025 10-K: …of customer service and a full range of services to complement the products we offer, our cost structure might be higher than some of our competitors, and this, in conjunction with price transparency, could put pressure on our margins. Further, as our competitors develop and expand their strategic use of AI, our…
- FCFS (FirstCash Holdings, Inc.)
- FY2025 10-K: U.S. total 1,207 Guerrero 14 Colima 13 Nayarit 10 1,732 Guatemala 75 El Salvador 18 Colombia 12 Latin America total 1,837 6 Table of Contents Pawn Operations Competitive Environment The Company encounters significant competition in connection with all aspects of its pawn operations. These competitive conditions may…
- FY2025 10-K: …wage. Segment Pre-Tax Operating Income The segment pre-tax operating income for 2025 was $177.4 million, which generated a pre-tax segment operating margin of 20% compared to $150.2 million and 19% in the prior year, respectively. The increase in the segment pre-tax operating income and margin reflected the increase…
- EZPW (EZCORP, INC.)
- FY2025 10-K: …metrics. Changes in any of these metrics, as might be caused by changes in the economic environment, competitive pressures, changes in customers' tastes and preferences or a significant decrease in gold prices, could materially and adversely affect our profitability and ability to achieve our planned results of…
- FY2025 10-K: …with our business activities. These competitive conditions may have an impact on our revenues, profitability and ability to expand. We compete with other pawn stores, banks, alternative lenders and loan brokers, credit unions and other financial institutions, such as consumer finance companies. We believe the primary…
- SBH (SALLY BEAUTY HOLDINGS, INC.)
- FY2025 10-K: …future periods. Operational, Strategic and General Business Risks The beauty products retail and distribution industry is highly competitive and is consolidating. We face significant competition from other beauty stores and outlets, salons, mass merchandisers, online retailers, drug stores and supermarkets. The…
- FY2025 10-K: …of changes in foreign exchange rates and sales from stores relocated until 14 months after the relocation. Revenue from acquired stores is excluded from our - 31 - comparable sales calculation until 14 months after the acquisition. Our calculation of comparable sales might not be the same as other retailers, as the…
- SIG (SIGNET JEWELERS LIMITED)
- FY2025 10-K: …margin include pricing, promotional environment, changes in merchandise costs, changes in non-merchandise components of cost of sales (as described above), changes in sales mix, foreign exchange, and the economics of services such as repairs and extended service plans. The price of diamonds varies depending on their…
- FY2025 10-K: …brand and category assortments, availability of financing, deep customer service and relationship building with the Company's guest service professionals, as well as competitive pricing. Although not a singular differentiator to the Company's value proposition, if significant price increases are implemented by any…
- ULTA (Ulta Beauty, Inc.)
- FY2025 10-K: 8203; $ 900,033 18. Segment reporting The Company operates specialty beauty retail stores in the United States selling cosmetics, fragrance, skincare products, haircare products, wellness products, and services. Nearly every store features a full-service salon. The Company has one operating segment and one…
- FY2025 10-K: 023. Gross profit as a percentage of net sales decreased 30 basis points to 38.8% in fiscal 2024 compared to 39.1% in fiscal 2023. The decrease in gross profit margin was primarily due to: ● 40 basis points of deleverage in merchandise margins driven by lapping favorable price increase impacts from the prior year and…
- BBWI (BATH & BODY WORKS, INC.)
- FY2025 10-K: …future, could have a material adverse effect on our results of operations, financial condition and cash flows. Our net sales, operating income, cash and inventory levels fluctuate on a seasonal basis. We experience major seasonal fluctuations in our net sales and operating income, with a significant portion of our…
- FY2025 10-K: …centers and key product and support talent. The turnover rate in the retail industry is generally high, and qualified individuals of the requisite caliber and number needed to fill these positions have 8 Table of Contents been in short supply in some areas. Competition for such qualified individuals and shifts in the…
- WSM (WILLIAMS-SONOMA, INC.)
- FY2025 10-K: …and to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for further discussion on the effect the global supply chain disruption has had on our results of operations. COMPETITION AND SEASONALITY The specialty e-commerce and retail businesses are highly competitive.…
- FY2025 10-K: …to contribute meaningfully to our profitability. Additionally, we will be disciplined on selling, general and administrative expenses ("SG&A"), including employment and advertising costs. Our pricing power, high e-commerce sales mix, retail optimization and highly efficient advertising are expected to drive earnings…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.