GameStop Stock Gone on an Epic Tear.

GameStop Corp:

GameStop Corp is a U.S. multichannel video game, consumer electronics, and services retailer. The company operates across Europe, United States, Australia, and Canada. GameStop sells new and second-hand video game hardware, physical and digital video game software, and video game accessories, mainly through GameStop, EB Games, and Micromania stores and international e-commerce sites, including www.gamestop.com, www.ebgames.com.au, and www.micromania.fr. The company has two main business segments: Video game brands and Technology brands. The technology brands segment sells wireless products and services and operates Spring Mobile managed AT&T and Cricket Wireless branded stores, along with the Simply Mac business.

It’s no secret that video game retailer GameStop has struggled in recent years, especially as video game sales have become increasingly digital. Due to GameStop’s dire financial straits, the company’s stock price has dwindled, with many predicting that the company’s closure is just a matter of time. Considering this, some may be surprised to see GameStop’s stock price sky rocket recently, with the company enjoying yet another spike.

GameStop’s stock price has jumped up yet again, with trading having temporarily halted. GameStop’s stock price is $96.93 at the time of this writing, though it was around $150 earlier today. Like the most recent incident, GameStop’s stock price jump is primarily due to Reddit day traders who are essentially trolling the stock market. It remains to be seen how long this will continue, but it seems more people are jumping on the bandwagon.

GameStop also said Chewy founder and former CEO Ryan Cohen would be joining its board of directors. Cohen is one of GameStop’s largest shareholders, and he’s expected to help strengthen the company’s e-commerce and technological capabilities. 

Those announcements appear to have ignited a massive short squeeze. Many investors had been betting against the struggling retailer by shorting its stock, which would have allowed them to profit if GameStop’s stock price declined. Yet as its price has soared in recent days, those short-sellers have suffered brutal losses. And to close their positions and stem their bleeding, short-sellers must buy GameStop stock purchases that may be further accelerating its gains.

The bulls should note, however, that short squeezes don’t last forever. Once vulnerable short-sellers exit their positions and opportunistic traders take profits, GameStop’s stock price could plunge. In fact, given that its price has already fallen from a high of $159.18 earlier Monday to roughly $95 at midday, this dynamic may already be occurring.

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