GameStop’s stock is skyrocketing to comical levels as part of an ongoing frenzy orchestrated by small-time investors on Reddit and TikTok. As a way to get back at the hedge funds that were profiting off GameStop’s steadily declining business, these investors banded together to buy the company’s stock and increase its value.
Why did the price of GameStop stocks jump so suddenly?
Jan 27, 2021 · Why is GameStop up? GameStop was languishing below $5 a share as recently as September, but it began to rally after Ryan Cohen, the entrepreneur founder of Chewy.com, took a stake, saying the ...
Why did GameStop skyrocket?
Feb 02, 2021 · GameStop's core business of selling physical video games to consumers via retail stores is being disrupted by digital downloads, similar to …
When did the GameStop stock thing start?
Jan 26, 2021 · GameStop's shares are now up more than 1,000% since the beginning of the year. Analysts say the stock's staggering ascent is due largely to a short squeeze, driven by a slew of individual investors...
How much did GME rise?
Jan 26, 2021 · In five days, GameStop stock has risen from about $40 to as much as nearly $120 in intraday trading Monday. What’s happening with GameStop’s stock is, in …
What happens when you short a stock?
If you believe the shares of a company will fall, you "borrow" shares via your broker, sell them immediately, and then hope to "return" them by buying them back at a lower price, keeping the difference.
When did Chrysler go bankrupt?
Many automakers were viewed as bankruptcy risks, and in fact, Chrysler filed bankruptcy in April 2009 and General Motors ( GM) followed a month later.
An army of individual traders is battling short sellers -- with the help of Elon Musk and Chamath Palihapitiya
Joe honed his investing skills as an analyst for Stock Advisor, Supernova, and Fool One. He battle-tested his investment philosophy and strategies as portfolio manager of Tier 1, a market-crushing Motley Fool real-money portfolio that delivered 24.58% annualized returns during its existence.
What happened
Shares of GameStop ( NYSE:GME) extended their torrid recent gains on Tuesday. By the close of trading, the video game company's stock price was up a stunning 92.6%.
So what
GameStop's shares are now up more than 1,000% since the beginning of the year. Analysts say the stock's staggering ascent is due largely to a short squeeze, driven by a slew of individual investors who are coordinating their buying efforts on sites such as Reddit and Twitter ( NYSE:TWTR) .
Now what
As of 6:20 p.m. EST, GameStop's shares are up an additional 40% in after-hours trading. The sharp upward move followed a tweet by Tesla CEO Musk that linked to a popular Reddit message board, which many GameStop bulls have used to promote the stock.
Where is Gamestop in 2021?
The Associated Press. Pedestrians pass a GameStop store on 14th Street at Union Square, Thursday, Jan. 28, 2021, in the Manhattan borough of New York. Robinhood and other online trading platforms are moving to restrict trading in GameStop and other stocks that have soared recently due to rabid buying by smaller investors.
What happens when you buy stocks on margin?
When they buy stocks “on margin,” they're using borrowed money, which can supercharge their gains and losses. With options, an investor can buy the right to buy the stock at a later date at a certain price. If the stock hits that target, investors can reap a bigger return than if they simply bought a share.
Who is Ryan Cohen?
The company announced earlier this month that Ryan Cohen, founder of online pet supply store Chewy, is now on GameStop's board along with two other former Chewy executives. Cohen's RC Ventures is one of the largest investors in GameStop.
Does GameStop sell games?
Despite its name, the retailer doesn't sell only games. GameStop is also popular with fans of pop culture collectibles, such as Star Wars toys and Funko ( FNKO) figurines, which help attract shoppers who aren't hardcore gamers to visit the brick and mortar shops.
Where is GameStop located?
It’s still struggling. GameStop, based in Grapevine, Texas, sells video games at more than 5,000 stores, and the pandemic has been keeping customers away. More worrisome is the long-term shift by customers away from brick-and-mortar stores and toward buying games online.
Do Wall Street bets have a group?
Yes, particularly those in a group called “WallStreetBets.” Their discussions are full of ideas for the next big trade to jump on, self deprecation and an appreciation of both winning and losing bets, as long as they’re bold. They’ve recently been encouraging each other to keep buying GameStop and push it ever higher, or “to the moon.”
Who Are Short-Sellers and Why Were They Drawn to GameStop?
GameStop's financial struggles have been well-documented over the past year, as the global pandemic and the shift to online purchasing have wreaked havoc on sales. Because of this, the video game retailer had become very appealing to corporate short-sellers—investors who anticipate a stock's decline.
How Did Reddit Users Cause the Surge?
So how did Reddit users band together to inflate GameStop's stock prices? Let's rewind to April 2020.
Was GameStop the Only Company Affected?
Reddit users behind the GameStop mania have recently turned their direction toward movie theater chain AMC and smartphone maker BlackBerry—two struggling companies that have also become popular among short-sellers.
Did Reddit Users Profit From the Move?
Although short-sellers reportedly took a $5 billion hit following the GameStop surge, not everyone experienced a loss. Several Redditors have claimed to have made millions off their GME investments.
How Are Wall Street and Government Officials Reacting?
Needless to say, Wall Street isn't exactly thrilled with the GameStop stunt. The previously mentioned investment firm Melvin Capitol has not disclosed how much it lost on its short position; however, CNBC reports the firm has received a nearly $3 billion investment from Citadel and Point72 following the losses.
Video games are hot again!
Travis Hoium has been writing for fool.com since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things. Follow @TravisHoium
What happened
Shares of video game retailer GameStop ( NYSE:GME) continued its incredible run on Wednesday, climbing as much as 93.7% in morning trading. By midday, shares had settled slightly and were "only" up 63.2% at 12:55 p.m. EST.
So what
The biggest reason for GameStop's rise this week was a Monday announcement of holiday sales and new board members. Holiday quarter sales rose 4.8% on a comparable-store basis and e-commerce sales jumped 308%.
Now what
For years, console and video game makers have been transitioning to digital sales of products rather than disks or cartridges. And in theory that should hurt GameStop's business. But the company has become a go-to location to get the hottest video game items and can add in accessories for gamers as well.