Although we are just over one quarter into 2021, it will be fascinating to see if any other story tops the GameStop (GME) short squeeze mania this year. The having a hard time video game merchant has supplied no end of headlines in 2021 after retailers re-wrote the stock market rulebook. That said, the mighty gains– up by 721% year-to-date even after drawing back by 55% from the January insanity highs– have triggered a big chasm in between fundamentals and evaluation. Accordingly, Ascendiant’s Edward Woo thinks that over the long run GameStop’s “present raised share prices will return down to match its current weak outcomes and outlook.” That stated, Woo expects the company to benefit from brand-new video game consoles sales from Sony and Microsoft. The new PlayStation and Xbox consoles, respectively, were introduced in November therefore far, sales have been “very strong.” As it is still the early phase of the new console launches, Woo says GameStop expects “continued strong development over the next year.” Woo likewise believes the arrival of Chewy co-founder Ryan Cohen who joined GameStop’s board in January and has actually lagged the effort to shift to a more e-commerce centric method has helped fuel the rally. However, GameStop is faced with a hazard it will find extremely difficult to counter: the continuous increase of digital sales. Even with the pivot towards e-commerce, Woo believes it will be difficult for GameStop to contend. “Recent reports by the computer game publishers shows that digital earnings is increasing at a fast lane (~ 90% or more of publishers’ profits),”, so issues are increasing that digital game sales (which GameStop has really low market share) is starting to be a bigger aspect (~ 70% of a game’s overall sales are now complete game digital downloads),” Woo said. “We remain extremely worried about the long-lasting prospects for its video game company specifically once hardware sales temper as the installed base matures.” With this in mind, Woo rates GME shares an Offer, together with a $10 price target. The implication for investors? A really painful 93% drop. (To view Woo’s performance history, click here) The rest of the Street’s take is hardly more comforting. Shares are expected to be altering hands for a 65% discount a year from now, given the average piece target stands at $53.80. Based on 2 Holds vs. 4 Sells, the analyst agreement rates GME stock a Moderate Offer. (See GME stock analysis on TipRanks) To discover great ideas for stocks trading at attractive assessments, check out TipRanks’ Finest Stocks to Buy, a recently released tool that unifies all of TipRanks’ equity insights. Disclaimer: The viewpoints expressed in this article are entirely those of the included analyst. The content is meant to be utilized for educational purposes just. It is really crucial to do your own analysis before making any financial investment.