GameStop (NYSE: GME) found itself in hot water on September 11, with shares plummeting 15.09% to $19.95 at market open following a shaky Q2 earnings report. While the company managed to beat EPS expectations with a slim $0.01 per share (compared to estimates of a -$0.09 loss), it wasn’t enough to offset other troubling figures.

Revenue plunged a staggering 31.9% year-over-year to $790 million, missing expectations by $106 million. Adding to the pain, adjusted EBITDA came in at a negative $18 million, a far cry from last year’s positive $1 million.

GameStop is grappling with deeper structural issues, and its stock is now clinging to hold onto the $20 mark—a level many analysts, including myself, see as critical support. If GME can’t stabilize, it may be in for an even rougher ride ahead.

GameStock stock chart analysis

GME shares are currently trading near the lower end of their 52-week range, while the broader market, with the S&P 500 Index, remains at the higher end, thus, lagging behind the overall market.

Over the past month, GME has been bouncing within a wide trading range between $19.88 and $25.02. Now, the stock is teetering near the lower boundary of that range. Support sits at $20.09, anchored by a trend line on the daily chart.

If GME can’t regain and hold this support, investors could see an accelerated sell-off, further dragging the stock into dangerous territory. The next few sessions will be pivotal as GameStop fights to stay afloat.

Analyst weighs in on GME stock

Interestingly, Wedbush analyst Michael Pachter is urging caution when it comes to GameStop shares. Pachter has maintained a “Sell” rating on GME since 2021, when he downgraded the stock from a “Hold,” and he hasn’t softened his stance.

Pachter had advised investors to bail out ahead of earnings, citing the company’s continued reluctance to engage with shareholders.

With this level of uncertainty, Pachter’s outlook as well as GME stock’s current price action may suggest that investors may want to tread carefully—or better yet, head for the exits.

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