GameStop (GME  ) has been one of the most fascinating stories in 2021. The company's stock price rose by more than 2,700% in January on a short squeeze engineered by Reddit traders. Shares slightly backed off in the ensuing months but not by significant amounts especially given the disconnect between the share price and fundamentals. In recent weeks as other meme stocks have caught a bid, GameStop also climbed by more than 100% although it remained below the January highs.

Many GameStop bulls are confident that former Chewy (CHWY  ) founder Ryan Cohen's large stake and involvement with the stock will help it to transition to becoming an ecommerce company. Therefore, the company's earnings results are highly anticipated to see if it is on the path to realizing this vision.

Inside the Numbers

In Q1, GameStop reported a loss of $0.45 per share, which was better than expectations of a loss of $0.84 per share. In 2020's Q1, GameStop lost $1.01 per share. Revenue slightly beat at $1.28 billion vs $1.16 billion which was a 27% increase from Q1.

GameStop named former Amazon (AMZN  ) executive Matt Furlong as its new CEO and announced its intention to sell 5 million shares. The company also didn't provide any guidance for the full year or next quarter which likely contributed to selling pressure. However, it did say that its sales momentum continued in Q2.

GameStop also said it had received a request from the U.S. Securities and Exchange Commission (SEC) to provide documents and information relating to the swings in its stock price. The company said it plans to cooperate as the SEC is starting to see the swings in meme stocks as a threat to financial stability.

The company also overhauled its management team in addition to its CEO hire by hiring several former Amazon executives to key posts. GameStop sees ecommerce as its future, however many are skeptical that it will be able to figure it out given that the future of the industry seems to be selling directly to consumers via download.

Stock Price Outlook

GameStop's stock seems to be in suspension. And, it's not a coincidence that share prices tend to decline when real news emerges. Obviously, GameStop's challenge is significant with odds stacked against it. However, the stock is already trading as if it is going to be successful which is evident by its $20 billion market cap.

For these reasons, GameStop should be avoided as the risk/reward remains unattractive.