Loop Capital Markets analyst Anthony Chukumba isn’t playing Monday Morning Quarterback on his decision on Jan. 25 to drop coverage of the struggling video game retailer amid insane spikes in its stock.
While a sell-side analyst of Chukumba’s pedigree dropping coverage on a stock is rare, he sounds like a man at peace with his decision.
“Absolutely not,” Chukumba responded on Yahoo Finance Live when asked if he would be reinstating coverage on GameStop (GME) now that the mother of all short squeezes appears to be done. Chukumba currently covers 19 companies, mostly retailers such as Best Buy, Dollar Tree and Dollar General.
Continued Chukumba, “GameStop has been a debacle of epic proportions. The valuation is completely disconnected from the fundamentals. A bunch of individual investors got hurt. Now hedge funds got hurt, too. At the end of the day, I am not too worried about these hedge fund guys. They are not mortgaging their futures on whether or not GameStop [stock] works or not. Individuals investors are.”
To be sure, with the short position in GameStop way down versus January the upside momentum in the stock has severely subsided this week.
GameStop shares were down a total of 70% from Monday to Tuesday heading into the start of Wednesday’s trading session. The stock rose slightly in Wednesday’s session on news the company hired several former Amazon executives to lead various business functions.
But the damage to the super bullish trading story has been done. The stock has crashed some 81% from its intra-day all-time high on Jan. 28, according to Yahoo Finance Premium data. It’s likely the downside pressure persists as the company’s fundamentals come back into focus as the Reddit community seeks out a new target to jawbone higher.
Warns Chukumba, “Here’s the scary thing. GameStop hit a high of over $480. Now it’s down to less than $100. Last we checked that stock is worth $10 a share. There’s still a lot of downside to go. I am thanking my lucky stars I made that decision [to drop coverage].”
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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