How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.

FOMO, or the fear of missing out, also plays a role in investing, particularly with tech giants and popular consumer-facing stocks.

What if you'd invested in GameStop (GME - Free Report) ten years ago? It may not have been easy to hold on to GME for all that time, but if you did, how much would your investment be worth today?

Image Source: Unsplash

GameStop's Business In-Depth

With that in mind, let's take a look at GameStop's main business drivers.

Headquartered in Grapevine, TX, GameStop Corp. is the world's largest video game retailer. The company offers the best selection of new and pre-owned video gaming consoles, accessories and video game titles, in both physical and digital formats. The company's unique buy-sell-trade program allows customers to trade in video game consoles, games, and accessories, as well as other electronics for cash or in-store credit. Through all its channels, the company sells various types of digital products, including downloadable content, network points cards, prepaid digital, prepaid subscription cards and digitally downloadable software as well as collectible products.

The company also publishes Game Informer, the world’s largest print and digital video game publication featuring reviews of new title releases, game tips and news regarding current developments in the video game industry. It also operates PowerUp Rewards program.

The company operates business in four geographic segments: United States, Canada, Australia and Europe. The company operates nearly 4,816 stores globally.

The company’s products are categorized as follows:

Hardware and Accessories (49.7% of FY20 Sales): GameStop offers new and pre-owned video game platforms from the major console and PC manufacturers. The current generation of consoles include the Sony PlayStation 4 (2013), Microsoft Xbox One (2013) and the Nintendo Switch (2017). Accessories consist primarily of controllers, gaming headsets, virtual reality products and memory cards.

Software (38.9% of Sales): The company provides new and pre-owned video game software for current and certain prior generation consoles. It also sells a wide variety of in-game digital currency and digital downloadable content.

Collectibles (11.4% of Sales): The category consists of licensed merchandise, primarily related to the video game, television and movie industries and pop-culture themes, which are sold through the company’s video game store and e-commerce properties, and ThinkGeek and Zing Pop Culture stores.

As per the company’s filing on Aug 31, RC Ventures, an investment firm managed by Ryan Cohen, acquired a 9.6% stake with about 6,215,326 shares.

Bottom Line

Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For GameStop, if you bought shares a decade ago, you're likely feeling really good about your investment today.

A $1000 investment made in May 2011 would be worth $6,517.38, or a 551.74% gain, as of May 25, 2021, according to our calculations. Investors should note that this return excludes dividends but includes price increases.

Compare this to the S&P 500's rally of 218.86% and gold's return of 18.69% over the same time frame.

Looking ahead, analysts are expecting more upside for GME.

Shares of GameStop have risen and outpaced the industry over the past three months. The company has been undertaking prudent efforts to fast track growth. It is particularly focusing on expanding in the digital arena. To accelerate transformation, the company has resorted to board restructuring. It has also undertaken capital restructuring to support growth. In this context, it has completed the redemption of $216.4 million worth senior notes. Also, it has completed selling 3.5 million shares, thereby aiding it to cash-in on the massive price surge witnessed since January, due to potential short-squeeze events. Apart from this, GameStop issued encouraging preliminary sales numbers for the nine-weeks ended Apr 3, 2021, wherein total global sales grew 11%. The company has been able to achieve sales growth despite challenges related to the pandemic.

Over the past four weeks, shares have rallied 6.56%, and there have been 2 higher earnings estimate revisions in the past two months for fiscal 2021 compared to none lower. The consensus estimate has moved up as well.