Why did GameStop stock rise?
GameStop Corp. (NYSE:GME) shares, rose in value on Thursday, February 17, with the stock price down by -3.83% to the previous day’s close as strong demand from buyers drove the stock to $123.41. Actively observing the price movement in the last trading ...
Did GameStop issue more shares?
The extreme rise for heavily shorted stocks has seen some companies take advantage by issuing new shares, allowing them to raise millions in cash more easily than would have been possible just a few weeks ago. But GameStop, the brick-and-mortar video game retailer at the center of the storm, has made no such move.
What happened to GameStop stocks?
There has been some buzz around GameStop recently after the company officially announced Immutable X as its blockchain partner for its upcoming NFT Marketplace. Shares of GameStop are still down by over 24% in 2022, as the stock trades at some of its lowest levels since the original short squeeze in January of 2021.
What happened with GameStop stock?
This phenomenon is known as a short squeeze. And it worked spectacularly well. GameStop's stock price enjoyed gains through most of January 2021, but they exploded late in the month and peaked on Jan. 28, reaching a record high of $483. Shares of ...
Why has GameStop stock surged?
In January and February 2021, the stock climbed 1700% in one week, largely thanks to the efforts of a group of Redditors on the subgroup r/WallStreetBets. Compared to the millions retail investors won (and lost) last year, the gains of roughly 100% this week may seem like playing small.
How did GameStop stock go up explained?
It's what happened with GameStop's stock. When a stock is very heavily shorted, a rise in its price can force short sellers to get out of their bets. To do that, they have to buy the stock, which pushes the stock even higher and can create a feedback loop.
How is GameStop stock still high?
The Ape Buzz Continues. Since GameStop investors kicked off the meme stock frenzy in early 2021, share prices have remained sky high. That's because the GameStop "apes" — as members of meme stocks' cult-like followings are called — are stubbornly holding onto the stock.
Why is GameStop stock going down?
The consumer electronics industry was pinched by supply chain shortages, the rise of the omicron variant of COVID-19, and declining demand for products in the video game niche compared to a year earlier. Each of those challenges likely affected GameStop over the holiday selling period, too.
What caused GME short squeeze?
A short squeeze can happen when a shorted stock rises in value. Short sellers must cover their short positions before the stock rises too high. In essence, they are “squeezed” out of their positions by a rising stock price.
Why did GameStop stock boom?
As retail investors began to buy up its shares and options — many of them egged on by Wall Street Bets and other forums — its stock began to surge, forcing the short-selling hedge funds to buy back the borrowed shares at a higher price, which itself pushed the stock price higher.
Is it a good idea to buy GameStop stock right now?
Gamestop (GME) stock is likely to decline after the current overheated rally. The stock can still be profitable in the long term if revenue growth stays consistent. But investors should avoid buying GME stock due to the high short-term risk.
How overvalued is GameStop?
GameStop's stock is substantially overvalued at current trading levels based on any reasonable assessment of business value. There have been many successful miracle turnarounds in U.S. corporate history, but to base your investment premise on a hope and a prayer does not seem prudent at this time.
How high can GME short squeeze?
A short squeeze is vigorous and can spike with no warning. This is where you see 100% gains in a matter of seconds and minutes. A short squeeze can even reach 1000% and 10,000% gains.
Will the GME squeeze happen?
GameStop's share price also went through a large drop in pricing. A short squeeze, one year after GME gained traction on WallStreetBets, is unlikely to happen. A growing focus on GameStop actual business performance indicates more downside potential.
How much is GameStop shorted?
GameStop continues to be a strongly shorted stock, with short interest levels exceeding 20% of its rather modest float of 63 million shares – AMC, for example, has a float of 513 million units.
Is GameStop going out of business?
GameStop Stores Are Closing At the end of 2020, GameStop announced that they planned to close 1,000 stores by March of 2021. GameStop's CFO Jim Bell explained the reasoning behind the closures, saying the move “will allow us to more efficiently and profitably service our customers.”
How much did GameStop go up during the squeeze?
GameStop is an American video game and gaming merchandise retailer, the shares of which closed at under $20 per share on January 12, 2021. In around 10 trading days, a series of short squeezes occurred making the stock price jump over 15 times, eventually resulting in a stock price as high as $500.
Who is behind GameStop surge?
Michael Burry, The Hedge Fund Genius Who Started GameStop's 4,000% Rise, Sold Before Its Reddit Surge. Is It Better To Lease Or Buy A Car In Summer 2022?
GameStop Stock Price Spike: A Pump and Dump Phenomenon?
The GameStop stock price run-up essentially resulted from a pump-and-dump scheme.
Stock Prices Increasingly Reflect Investor Behavior Rather Than The Strength Of Underlying Companies
To comprehend how prices work, it’s critical to understand that the stock market is almost entirely a “secondary market.” This means that on markets like the NASDAQ and the NYSE investors primarily trade assets among themselves.
The Bottom Line
When judged by any mainstream indicator, from median wages to productivity, today’s stock market bears very little relationship to the actual economy. The result is a speculation-driven market that leads to behavior like Reddit’s GameStop investment surge.
Get Expert Investment Advice
Economic indicators are the core of modern economic research. You can learn what researchers look for, and how they use that data, in our article on the subject.
The investor who has been credited with sparking interest in the video game retailer buys more shares
Evan is a Senior Technology Analyst at The Motley Fool. He was previously a Senior Trading Specialist at Charles Schwab, and worked briefly at Tesla. Evan graduated from the University of Texas at Austin, and is a CFA charterholder.
What happened
Shares of GameStop ( NYSE:GME) surged by as much as 20% today after Keith Gill, known by "Roaring Kitty" on social media and a more vulgar username on Reddit, increased his stake in the video game retailer. Gill has been widely credited with driving retail interest in GameStop, which culminated in a gargantuan gamma squeeze last month.
So what
Gill posted an update on Reddit's WallStreetBets forum on Friday evening showing that he had increased his position from 50,000 shares over two weeks earlier to 100,000 shares . The fresh investment increased Gill's average cost basis from $14.89 to $26.80.
Now what
The news comes after Gill testified virtually last week in front of the U.S. House Committee on Financial Services, which has been examining the saga over concerns around potential market manipulation and the possibility of individual investors being hurt.
1. There Are No Gains or Losses Until You Sell
Whether the stock market increases by 20% or drops by 40%, these gains and losses don’t matter until it’s time to sell your holdings. That means as a long-term investor, you shouldn’t worry about the daily battles of the stock market. The GameStop situation and other volatile stock patterns will pass by as short-term blips.
2. Invest in Index Funds and Know Them
Investing long term in index funds allows you to buy a spread of the entire market or index you’re after. For example, you can invest in the top 500 U.S. companies, all at once. By buying into a large spread, you buy into a little bit of everything and offset potential risks that occur with these volatile manipulations or any one stock.
3. Stay Diversified
Though it’s good to be a long- term investor in the stock market, it’s also important to diversify your passive income in other wealth building streams such as real estate.
Completely Efficient Markets Are Not Realistic
Even staunch advocates for efficient markets, generally don’t believe markets are accurate everywhere all the time. There needs to be some so-called friction in markets in order for investors to exploit and make money.
Ultimately Prices Are Where Buyers And Sellers Meet
Finally, prices are where buyers and sellers meet. No one argues that efficient markets are broken when a company that’s due to be taken private at a fixed cash price doesn’t see it’s stock rally because it reports a strong quarter before the deal closes.
