The GameStop (GME) rally is nothing new for some traders. On January 27, 2021, Austin Starks and his twin brother witnessed the first wave of GameStop in real time, seeing the stock price rise from a few dollars to more than 400 dollars. However, this parabolic rise was abruptly interrupted when Robinhood and other major brokerage platforms blocked the purchase of GME shares. The rally momentum wore off and GameStop slowly dropped to $15
per share.
Fundamental Analysis and Use of AI
What is Fundamental Analysis?
Fundamental analysis assesses the overall health of a company, looking at metrics such as cash flow and debt. This type of analysis is useful for predicting short and long-term price trends, regardless of the price and volume of shares.
The Core Strength of GameStop
Unlike other meme stocks like AMC, GameStop stands out for being a fundamentally sound investment. Metrics such as earnings per share (EPS) and EBITDA have recently reached high levels, demonstrating the company’s profitability. On the contrary, AMC continues to burn cash without showing growth toward profitability
.
AI as an Analysis Tool
Using Aurora to Analyze GME
To analyze GameStop, Austin Starks used Aurora, a trading assistant powered by great language models (LLM). Aurora takes GameStop’s raw earnings data and analyzes it, determining if the company is losing money, growing, or becoming more profitable. With the help of Aurora, Starks drew the following conclusions about GameStop
:
Conclusions on Investing in GME
Despite not having the profit margins of companies like Google or Microsoft, GameStop is still a decent investment. The company is stable and not close to bankruptcy, with plenty of room to improve its business. While there are other companies in the industry that might seem like safer investments, none are like GameStop. Buying some GME shares may not be a big waste of money and could prove to be an opportunity if the stock price jumps back up dramatically
.
The Role of AI in Investment
A New Tool for Financial Analysis
The use of AI, such as Assistant Aurora, in evaluating GameStop’s financial data demonstrates the tangible application of artificial intelligence in the synthesis and automation of financial information. By combining the power of language models with fundamental data, investors can gain valuable insights and make more informed decisions
.
Final Thoughts on GameStop
GameStop’s story, which continues to evolve, is a testament to the unpredictable nature of markets and the growing influence of retail investors in the era of social media and accessible trading platforms. Using the capabilities of AI and combining them with traditional fundamental analysis, investors can navigate this new landscape and perhaps discover the next GameStop
before it takes off.