GameStop (GME) shares are trading at "a level that ignores the company's many challenges ahead," Wedbush said Friday in a note to clients.

The company has about "$10 per share in cash now, but with no clear strategy to reasonably deploy capital, we don't believe shares should trade at 3x cash," according to the note.

GameStop disclosed "accelerated store closures" along with its last earnings report and has non-specific plans to enter the trading card business," Wedbush said. "With no clear strategy to leverage its store base, management indirectly appears to be in the midst of closing down its core business," analysts said.

The note listed "insurmountable barriers" to GameStop's return to growth, including a shift of game sales to digital from physical and an ongoing hardware sales decline with the proliferation of streaming services.

Wedbush said the company will likely deliver in-line Q3 results on Tuesday.

Wedbush reiterated its underperform rating on GameStop and price target of $10.