That old gravitational pull for stocks hasn’t disappeared. It’s called reversion to the mean—and it’s not a lot of fun for investors in high-flying shares whose fundamentals stink. Reality eventually intervenes. Watch that happen to GameStop.
Alas, this all may be too late. “In our view,” wrote Telsey Advisory Group in a report, “these are the right steps to move forward, but could take longer to generate results.” GameStop has a negative operating margin of 5% and return on equity, a vital metric for investors, is minus 58%.
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