NEW YORK (AP) — Beneath GameStop’s inventory surge is the grim reality of its prospects: The video game retailer is floundering even as the industry around it is booming.

GameStop has been trapped in a battle between big-moneyed hedge funds betting against it and small investors trying to prop it up. That’s caused GameStop’s share price to soar despite the shaky financials underneath.

Flailing companies like AMC Entertainment and American Airlines have enjoyed a stock explosion, but GameStop has been the primary battleground between the Davids and the Goliaths. Shares rocketed 1,600percent in the previous 3 weeks, closing at $325 per share on Friday and giving GameStop a market cap of almost $17 billion. On Tuesday, they fell 60% to near $90.

Many investors fully understand the contradiction between GameStop’s stock price and its business fundamentals. However, for people who envision it to be the following Tesla or Amazon, the stark reality is: It’s likely not. The organization’s quarterly report issued in September revealed another steep quarterly revenue decrease as it struggles to adapt to the rise of mobile gaming and digital downloads that have rendered its over 5,000 stores obsolete, even more so during the pandemic.

And the attention-grabbing media coverage did not attract shoppers back into the stores in recent weeks. Customer traffic declines accelerated in January, according to new research from analysis firm For the week ended Jan. 18, the number dropped 20.3% compared to a year ago.

Analysts polled by FactSet have a”sell” rating on the stock and a price target of $13.44 per share. Some analysts consider that a reasonable evaluation could pay about $20 to $30 per share at best.

While GameStop’s brand new board member Ryan Cohen, the founder of online pet store Chewy, has raised hopes of a turnaround, it’s going to be an uphill battle.

“It’s intriguing to watch. But ultimately you can’t escape gravity,” explained Scott Rostan, CEO of Training The Street, that educates financial modeling and valuation to school students and MBAs. “Ultimately, the reality is going to install, and in the end, the principles will have to come to play. ”

The Grapevine, Texas-based business was founded in 1984 since Babbage’s and took over the GameStop name in 2000. It was the destination to catch the latest video games just as they were published. But in addition, it became the place to exchange in old consoles and games to get cash or credit to buy new ones.

Sales declined over the last ten years with the rapid shift toward downloading matches. Annual sales have gone from its peak of $9.5 billion in fiscal 2012 to an expected $5.15 billion to the year ended Jan. 30, according to FactSet.

At one GameStop location in Brooklyn, there have been glowing liquidation notices papered round the front windows.

Most of the games moved fast at a deep discount. Piles of games to its Xbox 360 — the Microsoft gaming console which went from production about six decades ago — might be had for a quarter rather than the 50 they commanded.

Carlos Cruz, 33, of New York City, used to pay a visit to GameStop after a week to buy new games and trade in old ones. But that ceased a few years ago when he started to download matches. Now he goes to GameStop every two months, especially to get certain exclusives.

“It’s easier for me to download the games at the house, not go anyplace,” said Cruz, noting that 90 percent of his games are electronic.

Xbox Live, PlayStation Network, Nintendo eShop, and online game system Steam all let players download games. And Amazon is testing the cloud gaming arena with a new streaming service called Luna. Discounters such as Walmart, Best Buy and Target also have ramped up their own offerings.

Meanwhile, the entire video game market was exploding, a trend accelerated by the pandemic as Americans stay home. The worldwide gaming industry was expected to strike $174.9 billion final year and hit $217.9 billion by 2023, according to analytics firm Newzoo. That’s up from Newzoo’s prediction issued during the start of the pandemic last year of $200.8 billion.

The company posted total sales down 3.1% for its nine-week period ended Jan. 2 but it managed to offset store closures with powerful game console requirement. Online revenue, which accounted for approximately 30% of overall business earnings, soared by more than threefold. And GameStop has decreased its overall debt on its balance sheet by nearly $600 million since ancient 2019.

In mid-January, GameStop included Cohen and two of his former colleagues from Chewy to its board following Cohen had driven the company to focus on its online operations.

“GameStop needs to evolve into a technology company that delights players and provides exceptional digital experiences — not remain a video game retailer that overprioritizes its predecessors footprint and stumbles around the internet ecosystem,” said Cohen in a letter to the board of supervisors last November.

From the end of the most recent fiscal year, GameStop will have closed over 1,000 shops since mid-2019. It has been incorporating PC gaming, computers, monitors, game titles and gaming TVs to its mix. But analysts believe any turnaround will take some time, and some think Cohen’s experience leading an internet pet shop isn’t applicable to the gambling enterprise.

“I think he is a good merchant and a fantastic merchant,” said Wedbush analyst Michael Pachter. “But can you download pet food or pet toys? I do not believe so.”

Cohen, whose investment firm acquired a 12.9% stake in GameStop in recent months, declined to comment. GameStop could not be reached for comment.

Critics state GameStop could make the most of the lofty stock price and perform their own stock offering such as American Airlines. The chain could use that money to reinvest in the business enterprise.

But given so much doubt, the question is: at what price?

“nobody knows what the real valuation is,” said Alon Y. Kapen, a corporate transaction lawyer at Farrell Fritz. “And you don’t know when that window is going to shut”