Do you trade stocks for excitement and thrills, or to make money and actually keep it? This is a question for sensible investors to consider as GameStop (NYSE:GME) is certainly garnering attention in 2024, but not for all the right reasons. Building wealth slowly and sustainably is better than chasing get-rich-quick dreams with GameStop stock. 

It’s not just about returns; it’s about risk-adjusted returns. When the risk is too high, you’d better just step aside. So, don’t just follow a famous meme stock trader and hope for the best. Conduct your due diligence on GameStop — I mean the actual company and not just the stock — and you’ll surely agree that there are better businesses to risk your capital on.

Facing the Facts About GameStop

Let me start off with a relevant quote from Rohan Reddy, director of research at Global X Management. He warned, “It’s clear GameStop is less about fundamentals,” and added, “This all points to an enhanced state of euphoria.”

Reddy is 100% right, but prudent investors can’t afford to ignore GameStop’s fundamental facts. One of those facts is that GameStop is unprofitable, having recorded a $32.3 million net earnings loss for the first fiscal quarter of 2024, which ended on May 4.

Turning to the company’s top-line results, GameStop’s Q1-2024 net sales declined to $882 million, versus $1.237 billion in the year-earlier quarter. Also during that time frame, GameStop’s total assets declined to $2.5871 billion from $3.0702 billion.

There are two other bothersome facts to consider. First, GameStop didn’t hold a conference call after releasing the company’s quarterly results. That’s unusual, and it’s not encouraging.

Also, GameStop sold a whopping 75 million shares in an at-the-market offering. Sure, that’s one way to raise capital, but it’s alarming that GameStop’s management felt it was necessary to issue and sell so many shares. It raises concerns about share-value dilution and, with that, questions about whether the current shareholders can trust GameStop.

Don’t Rely on a Meme Lord

Meme lord Keith Gill, also known as “Roaring Kitty,” is famous for buying massive quantities of GameStop stock. Reportedly, Gill was recently GameStop’s fourth-largest shareholder. This calls into question whether Gill is the everyman he once seemed to be, and whether he’s now the Goliath in this apparent David-and-Goliath narrative.

Some commentators might even ask whether Gill is guilty of manipulating stock prices. In any case, Gill can’t single-handedly prop up the GameStop share price — nor should be he expected to.

As you may recall, GameStop stock shot up like a rocket when Gill announced a YouTube livestream. But then, the stock tanked on the day of the livestream.

It just goes to show that there’s no way to predict the short-term trajectory of the GameStop share price. If you get on the roller coaster at the wrong time, it could be fatal to your trading account.

Gill could take profits on his gigantic GameStop stock position at any time. He’s not responsible for your financial well-being, and it’s your job to keep your wealth safe from extreme volatility.

GameStop Stock: Choose Sanity Over Thrills

Circling back to the beginning of this discussion, it’s important to know why you’re investing in a particular asset. The objective should be to achieve good returns with an acceptable level of risk.

Given GameStop’s less-than-stellar fundamentals, it’s highly risky to invest in the company. Gill’s social-media antics and allegations of share-price manipulation only add to the overall sense of confusion and unpredictability.

Most importantly, irrespective of short-term price gyrations, GameStop stock will eventually reflect the company’s well-being or lack thereof. With that in mind, today’s take-away is that it’s neither safe nor sensible to invest in GameStop for the long term.

On the date of publication, David Moadel 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.