Retail investors have inflated GameStop 's price to a point that is "disconnected from the fundamentals of the business," according to Wedbush. The meme stock could now shed three-fourths of its current value. Analyst Michael Pachter reiterated the stock at underperform with a price target of $6, which reflects a downside of 76.5% compared with where the stock closed Monday. Pachter said the stock's status as a favorite of meme stock traders and short sellers pushed its current price beyond where it can sustainably trade at. Though trading feels disconnected from actual business trends, Pachter expects its challenges will be apparent in third-quarter earnings and beyond. In the short-term, the company will feel headwinds from hardware constraints, employee turnover and a slow start to its NFT market. Cash burn also will be an issue as GameStop faces long-term liquidity issues. Meanwhile, retaining customers could be difficult as gamer preferences are changing, with a shift away from physical video games toward digital, cloud and subscription alternatives. "GameStop's transformation efforts have missed the mark so far, leaving it to rely on a challenged core business," Pachter said. "We expect significant cash burn for the remainder of this year and for FY:23, eventually forcing the company to issue more equity. The shares remain at trading levels that are disconnected from the fundamentals of the business due to irrational support from some retail investors that was boosted by the NFT marketplace launch and stock split." Pachter expects inventory investments and the success of "Call of Duty: Modern Warfare II" will boost sales in the the third quarter, which will be announced after the bell Wednesday. He predicts $1.41 billion in sales, which is higher than the consensus estimate of $1.36 billion, and would mean year-over-year growth of 8.7%, he said. But Pachter is projecting a loss of 35 cents per share, which is wider than the 28 cents per share loss Wall Street expects. He cited higher labor costs and the expense of funding its turnaround efforts for his view. And he said the fate of its fourth quarter remains unclear and will likely be tied to how the electronics retailer performed on Black Friday. Channel checks showed a limited supply of more expensive hardware like the Xbox Series X and PlayStation 5, he said. For the more value-focused consumer, the Xbox Series S had a large discount, while Nintendo had a Mario Kart 8 Deluxe Switch bundle. But he said both had "somewhat lukewarm receptions." He said software, which includes games, didn't have price cuts or restocking this year that would have been expected for big-name games because the company instead placed its focus on the Switch and discounted items. The stock was down 4.8% in trading Tuesday. It has dropped nearly 35% year to date. — CNBC's Michael Bloom contributed to this report.