GameStop is slated to post earnings Tuesday afternoon, with traders anticipating a big swing in its stock following the results.

The retailer's stock has rallied this year after some encouraging news, including support from "The Big Short" investor Michael Burry.

GameStop is scheduled to report earnings after the market closes Tuesday, with traders anticipating a big swing in the video game retailer's stock following the results.

Based on current options pricing, GameStop (GME) stock is seen moving up to 8% in either direction by the end of the week following the release. A shift of that size from Friday's close could lift shares above $24, or drag them back below $21, erasing some of their recent gains.

GameStop's stock has surged close to 13% since the start of the year after a string of encouraging news, including an endorsement from "The Big Short" investor Michael Burry, and statements from CEO Ryan Cohen suggesting a major deal could come soon. Cohen told CNBC in January that he's looking to make a “very, very, very big” acquisition of a larger consumer company.

Investors will likely be watching closely Tuesday for updates on what next steps could be for GameStop, which has struggled to reinvent its business.

Some of GameStop's efforts to redefine its strategy so far have included expanding its collectibles business and buying up Bitcoin, as sales from its core business continued to slide and the retailer shuttered stores.

While the winter holiday quarter tends to be the strongest of the year for many retailers, GameStop could still record another decline in sales for the fourth quarter, as it did in the third quarter and year-ago period. This time last year, GameStop posted adjusted earnings of 30 cents per share on a nearly 30% year-over-year drop in sales to $1.28 billion for the fourth quarter.

Despite its recent gains, shares of GameStop are down some 12% from a year ago and remain well off their 2021 highs in the height of the meme stock craze.

Read the original article on Investopedia