GameStop Corp. (GME): A Bull Case Theory

We came across a bullish thesis on GameStop Corp. on Value investing subreddit by AlternativePaint6. In this article, we will summarize the bulls’ thesis on GME. GameStop Corp.'s share was trading at $24.35 as of October 7th. GME’s trailing P/E was 34.02 according to Yahoo Finance.

GameStop Corporation (GME) represents a highly asymmetric investment opportunity, offering a low-risk, high-reward profile grounded in operational turnaround and visible growth potential. Under Ryan Cohen’s two-phase strategy, the company has successfully stabilized its business by cutting costs, closing underperforming stores, streamlining operations, and growing cash, achieving profitability despite temporary revenue declines and stock dilution.

This sets the stage for phase two: growth and digitalization, focused on building high-margin digital products, monetizing collectibles, and leveraging a loyal customer base. Q1 and Q2 2025 marked the first profitable quarters with revenue growth, highlighted by a 63% increase in collectibles revenue. Strategic partnerships, such as with PSA for card grading, create a seamless, high-margin ecosystem far superior to competitors like eBay, while upcoming offerings like Power Packs promise additional digital revenue streams.

GME trades at a market capitalization near $10 billion, close to its $8 billion cash reserve, providing a hard downside floor. Subtracting cash, the operating business—including a profitable base, PSA partnership, and brand recognition—is valued at only $2 billion, implying an adjusted operating P/E of 4–11, materially below peers. The market continues to misprice GME due to its “meme stock” history, despite growing institutional ownership, which now totals ~45%.

The U.S. collectibles market alone could drive significant incremental revenue, with even a 5% share potentially generating $1 billion in annual profits, supporting a stock price of $50–$100 conservatively, and much higher if market share or additional revenue streams expand. With low downside risk and substantial upside, GME offers a compelling risk/reward profile relative to the S&P 500.

Previously we covered a bullish thesis on DICK’S Sporting Goods, Inc. (DKS) by BotMissile in May 2025, which highlighted the company’s strong fundamentals, attractive valuation, strategic Foot Locker acquisition, and opportunities to scale private label margins and optimize costs. The company's stock price has appreciated approximately by 25.62% since our coverage. The thesis still stands as DKS retains long-term strategic upside. AlternativePaint6 shares a similar but emphasizes GME’s operational turnaround, digital growth, and asymmetric risk/reward profile in collectibles.

GameStop Corp. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held GME at the end of the second quarter which was 26 in the previous quarter. While we acknowledge the potential of GME as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.