• GameStop (GME) stock remains unappealing from a fundamental perspective. 
• The NFT angle looks less and less likely as the market evolves in 2022. 
• Stock split news isn’t going to sway any investors.

Investors in GameStop (NYSE:GME) stock are looking for reasons to remain upbeat despite the overwhelming evidence to the contrary. As much as I’d like to be a contrarian and say that GameStop is a worthwhile investment, I can’t.

GameStop is the original meme stock and it’s proving to be very resilient even as multiple forces weigh against it. Even though it hasn’t fallen back to pre-pandemic levels below $10 like many analysts have speculated, that still seems to be the direction that it’s headed.

As we’re all aware, 2022 is very different from 2021. The forces that propped GameStop up in 2021 aren’t present anymore.  That implies that GameStop will continue to head downward. GameStop has a powerful contingent behind it. Retail investors could very well serve to keep prices elevated for some time. Sooner or later, though, fundamental truths are going to catch up to the company. When it happens, GME stock will experience a capital exodus.

Fundamental Lack of Appeal

The reason to be pessimistic about GameStop is much the same reason to be pessimistic about mini growth stocks right now. Despite the fact that these companies continue to experience a top-line turnaround, they also continue to experience widening losses.

For the 52 weeks that ended in January 2022, GameStop posted revenues of $6 billion. That represented strong growth over the same period a year earlier when GameStop posted $5.1 billion in revenues.

But investors would be hard-pressed to remain optimistic given that the company’s net loss has reached $381 million dollars. A year earlier during the same period, GameStop’s net losses only reached $215 million.

This isn’t a deep fundamental analysis. Rather, it is a recognition that the company faces a far different investment environment this year than last. Readers are well aware now that increasing revenues can’t trump widening losses when the Federal Reserve raises interest rates. No matter what your thoughts about GameStop’s ascendance, you have to recognize at some point that capital will stop flowing into speculative investments like GameStop.

Will NFTs Help GME Stock?

Back in late March, GameStop announced that it was going to build an NFT marketplace. When the company made the announcement, it was noted that the marketplace would be open by sometime in July. The markets reacted positively to the news, and the stock’s price jumped to nearly $200.

Those prices have since come down as the market for cryptocurrency and NFTs have somewhat soured. But GameStop investors shouldn’t be very enthusiastic about the NFT angle in any case.

A report from the data website NonFungible shows that NFT sales are down 92% since September. The problem isn’t only that speculative investments are getting trashed as interest rates rise. Rather, it’s also a consequence of market dynamics specific to NFTs themselves.

Essentially, the supply of NFTs far outstripped the demand. One report suggests that there were 9 million NFTs created, but that of those 9 million, only 2 million have been sold. It seems that NFT creators simply became far too overzealous.

So the idea that GameStop’s marketplace for NFTs is going to be a hit seems unlikely. Even if it is introduced in July, there’s probably not going to be much selling occurring. And the selling that does occur won’t garner the prices GameStop was seeking when it hatched the idea to create an NFT marketplace in the first place.

Stock Split News

GameStop is also considering undertaking a stock split. The details of that proposed stock split remain murky. However, it should remain uninteresting in any case.

GameStop is not Tesla (NASDAQ:TSLA), Apple (NASDAQ:AAPL) or Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). Those companies can undertake stock splits that remain logical and compelling. Their massive stock prices necessitate such a move. If investors can suddenly buy Alphabet shares at $150 apiece, that is fundamentally appealing. It changes the psychology because of price. GameStop is nothing like them. It is not particularly high-priced and remains very attainable. The news that it is undertaking a potential stock split shouldn’t excite investors in the same way that those tech companies should.

What to Do With GME Stock

Just to summarize briefly, GameStop doesn’t look to have much going for it these days. Fundamentally it’s unappealing, its NFT marketplace doesn’t look to have legs, and the stock split news is fundamentally different from that which is appealing. Expect it to continue to fall, and don’t buy in.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.