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Gaming retailer GameStop has been sitting very high over the last couple weeks after its stock was slingshotted from about $40 a share to about $120, but the reasoning at the time wasn’t clear. It has been rising and falling with no real rhyme or reason as the market sits in a flurry of chaos, but today, it saw yet another massive spike. Following some actual good news out of GameStop Corp., the retailer’s stocks jumped over 46% at its peak to over $200 a share.
This giant swing was all sparked by a long-bubbling movement from Reddit. GameStop’s stock is one of the most shorted stocks on the market, meaning hedge funds are betting against it and expecting it to go down. If the price doesn’t go down and instead rises, they have to pay more money which makes the stock rise more. GameStop’s stock shot up in January, steadily approaching a $350 price as the public rallied together to squeeze Wall Street dry and get some riches along the way. It eventually came crashing back down, but a tiny heartbeat still signified it could rise from the dead once again.
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Now, GameStop’s stock closed at $194.50 with about a 41.92% gain today. As known since it brought on top digital storefront talent, Bloomberg reports that GameStop will be transitioning into becoming an ecommerce business, similar to Amazon, and Chewy.com founder Ryan Cohen will lead the charge. Cohen has quickly become instrumental part of the company’s future, leading to internal changes, alleged firings, and the more recent, organic rise in stock. The board member has been pushing the company to go this direction for a while, leading to some interest in investors.
In January, GameStop gained attention from Elon Musk and numerous other public figures, causing the stock to rise even further. It’s highly likely that this good news will cause a similar level of hype, except this time it may be warranted. Originally, the company didn’t have much going for it and was on its way to its imminent death. The sudden interest around the company seems to have shown to GameStop where it could be if it found a way to reinvent itself, likely putting trust in Cohen from executives.
As everyone was riding high on the riches brought in by GameStop last month, the fun quickly ended. Brokerage Robinhood halted trading on GameStop stocks amongst other brokers, preventing people from buying in, causing legal chaos. The US Justice department got involved and congress began holding hearings to evaluate the situation, seeking to find things like market manipulation. Nothing terribly significant has resulted from them, but it’s likely this previous frustration will prevent brokers from making similar moves. So long as good news keeps coming, GameStop’s stock will probably continue to rise for the foreseeable future and could actually save the company.
Source: Bloomberg