On December 31, 2020, GameStop closed at $18.84. By the end of January 2021, the stock closed

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Question:

On December 31, 2020, GameStop closed at $18.84. By the end of January 2021, the stock closed at an astronomically high $325, for an astounding one-month return of 1625%! A week later, the price was back down to $63.77 per share, for a one-week drop in value of 80%.

For the group project, you will perform a valuation of GameStop (GME). The accompanying spreadsheet contains financial statements and returns data for GME and capital market information. For this valuation, please make Cash & ST Investments the plug in your pro-forma analysis. Please clearly state the assumptions you are making concerning sales growth rates, cost of capital, financial ratios, etc. and why you chose them. Ultimately, you should produce a price per share for GameStop as of Dec 31, 2020 based on your assumptions.

Use your model to answer two questions:

The actual price for GameStop on Dec 31, 2020 was $18.84. Based on your model, would GameStop have been a BUY or a SELL at that price? You may make a conditional recommendation (for example, BUY if the stock hits $X/share etc.). The decision to short sell the stock is also a possible recommendation.
GameStop stock closed at $325 per share at the end of January 2021. Using your model, characterize the level of sales growth necessary to justify this share price.

Some Notes:

Shares outstanding are 69,746,960.
You may assume that Debt, Other Liabilities, Total Investments & Advances, Other Assets, and Capital Leases remain at their current values and that there are no unusual expenses or nonoperating gains/losses going forward.
The aim of this project is to build your own valuation model. You are not permitted to use readymade valuation models, but you are allowed to use public financial information.