10:40 AM EDT, 09/11/2024 (MT Newswires) -- GameStop ( GME ) shares are currently trading at a level that "ignores" the many challenges that the company is facing, Wedbush analysts said in a note Wednesday.

"The company faces a near insurmountable barrier to its planned return to growth," the investment firm said, citing several factors including the ongoing shift of game sales from physical to digital and GameStop's ( GME ) "total lack of any strategy to enter new categories with growth potential."

Although the videogame retailer has been able to manage operating losses, Wedbush said "it would be just as reasonable for management to close all of its stores and operate as a bank."

Weak game sales, growing subscription services and declining hardware sales amid the proliferation of streaming services are also weighing on the outlook for GameStop ( GME ), it said.

"GameStop ( GME ) has roughly $10 per share in cash now, but without a hint of any strategy that would reasonably deploy capital, we do not see why shares trade at 2x cash," the firm said.

Wedbush reiterated its underperform rating on the stock and trimmed its price target to $10 from $11.

Shares of GameStop ( GME ) were down more than 16% in recent trading.

Price: 19.60, Change: -3.85, Percent Change: -16.41