The GameStop surge is making headlines because it’s being driven by retail investors — individuals who buy and sell stocks for their own gains, as opposed to professional investors working on Wall Street — on the subreddit r/WallStreetBets (WSB), a community 2.9 million-strong that refers to members as “degenerates” and idolizes Elon Musk.
Full Answer
Why did the price of GameStop stocks jump so suddenly?
May 27, 2021 · Outsized enthusiasm for the stock has offered a needed lifeline to GameStop, enabling it to raise capital and revive its ailing retailing business. While this move increases the odds of GameStop's...
Will GameStop Squeeze again?
Oct 11, 2021 · Shares of GameStop ( GME-0.16%) are running 6.6% higher in morning trading Monday on no news particular to the video game retailer, though its stock remains one of the most mentioned tickers in ...
Why is GameStop stock going up?
Mar 23, 2021 · Among other things, GameStop cites store closures as a reason for the decline--both permanent closures it planned prior to COVID-19 and temporary ones due to the pandemic. So yes, GameStop stock is...
How high could GameStop go?
Jan 26, 2021 · The video game retailer's reached an all-time high as a frenzy drove its long-dormant stock through the roof Monday morning. The problem was that GameStop hadn't done anything to warrant the sudden increase in value. In fact, the company has been fizzling for some time now. Its own projections have it not turning an annual profit until 2023.
How many stores does GameStop have?
GameStop (NYSE: GME) is primarily a bricks-and-mortar video game retailer with more than 5,000 stores. But this business model is frowned upon by many in the investment community due to both long-term and short-term factors. Long-term, fewer and fewer gamers actually journey out to physical stores to purchase their games.
Is GameStop a dying company?
GameStop has suffer ed massive ly from these negative trends. And some have begun to consider it a dying business. In the third quarter of 2020 (the most recent reported), sales were about $1 billion, down 30% from the same quarter in 2019. The company had a net loss of $18.8 million, or 0.29 per share.
How much did GameStop lose in 2020?
The company had a net loss of $18.8 million, or 0.29 per share. As a result of results like that, GameStop stock had been drifting lower for years. It was around $56 a share in late 2013, but had fallen to under $4 by March of 2020. Of course, that was before the massive surge.
What hedge fund lost money on GameStop?
In fact, one hedge fund called Melvin Capital lost so much money on its GameStop short positions that it needed a capital infusion of nearly $3 billion to shore up its finances. And GameStop isn’t the only stock that has seen this kind of tug of war between retail investors and hedge funds lately. A few others include:
Is GameStop a brick and mortar company?
GameStop (NYSE: GME) is primarily a bricks-and-mortar video game retailer with more than 5,000 stores. But this business model is frowned upon by many in the investment community due to both long-term and short-term factors. Long-term, fewer and fewer gamers actually journey out to physical stores to purchase their games. Instead, they download them. Short-term, the COVID pandemic has kept and continues to keep shoppers away from all types of retail locations.
Is GameStop a cult stock?
The strange saga of GameStop’s cult stock status can be traced back to last September , when Ryan Cohen – investor & founder of the online pet food giant Chewy – took a 13% stake in the company and started urging it to move more of its business online and become a serious rival to Amazon. Cohen and two associates were added to the company’s board in January.
Is GameStop closing in 2021?
Like many retailers, already suffering from the shift to online sales, the video games chain is losing money and plans to close 450 stores in 2021. However, surprisingly, GameStop has become one the hottest stocks of the year.
Is GameStop a one stop shop?
The retailer previously built a competitive advantage as a one-stop-shop for all things gaming, especially electronic gaming. Customers could visit GameStop to find the latest video games, get refurbished hardware, and buy, sell, or trade games.
Is GameStop a digital retailer?
GameStop has used its capital to transform itself primarily into a "digital-first, omnichannel retailer.". Also, it has replaced much of its previous executive management team, removing both the CEO and CFO. Experienced internet retail leaders such as incoming chairman of the board Ryan Cohen has joined the company.
How much did GameStop lose in 2019?
GameStop lost $471 million in 2019. Moreover, fourth-quarter fiscal 2020 net sales fell by only 3% from year-ago levels.
Is GameStop a middleman?
However, the rise of downloadable video game sales slowly made GameStop an unnecessary middleman as gamers could buy games and upgrades more easily directly from manufacturers. Image source: Getty Images.
Will Healy be a stock analyst?
Will Healy is a freelance financial writer who has had a lifelong interest in the stock market, along with numerous, less-useful pursuits . Will pursued his passion for writing after working in the corporate world as both an analyst and an insurance sales professional. He holds a bachelor's degree from Texas A&M Univesity, and M.S. from the University of North Texas, and an MBA in finance and strategy from the University of Texas at Dallas Jindal School of Management.
Who is Will Healy?
Will Healy is a freelance financial writer who has had a lifelong interest in the stock market, along with numerous, less-useful pursuits. Will pursued his passion for writing after working in the corporate world as both an analyst and an insurance sales professional.
Who is the founder of Chewy?
Cohen previously co-founded online retailer Chewy . Additionally, to adapt its buy-sell-trade business to a world of video game downloads, it has ventured into collectibles, board games, and other items. Unfortunately, this move may also leave GameStop with a less significant competitive advantage.
Who is the CEO of GameStop?
The company also declined to provide guidance for 2021. GameStop CEO George Sherman tried to highlight some positives in the earnings report, saying, "I am proud of how our entire organization came together in 2020 to adapt to the challenging pandemic environment, effectively serve our customers' demand for gaming and entertainment products, ...
Who is the chief operating officer of GameStop?
Following the release of the earnings report, GameStop announced that Jenna Owens (previously Amazon's director and general manager for distribution and multi-channel fulfillment) has been hired to be GameStop's new chief operating officer.
Why GameStop?
Because it’s funny. It really is that simple. Many of Reddit’s most popular communities are based around video games, and GameStop is a particularly infamous company for many gamers. The store has a returns policy that allows customers to return games to build in-store credit that can be used to purchase other games.
What now?
Online communities of amateur investors have the ability and will continue to move the needle on stocks. If big, public shifts like this continue to happen, there may be a crackdown on communities like r/wallstreetbets for market manipulation.
Does GameStop itself have anything to do with this?
No. The company’s last communication with investors was a Jan. 11 report on its 2020 holiday sales results (total sales down 3.1% from 2019, for those counting).
Did a billion-dollar hedge fund actually go out of business over GameStop?
No. But Melvin Capital, the fund in question, did take a huge loss when it closed out its short position (i.e., paid its bet and left the table), CNBC reported on Wednesday.
How much money have people made?
Bear in mind that this is paper wealth (and it’s fluctuating wildly), but the trading on GameStop — by the way, on Tuesday it was the most-traded security in the world — has created about $2 billion in wealth, most of it for Cohen and the company’s two other biggest shareholders.
How does this end?
Short squeezes are a risk of short selling and one that institutional investors are prepared to face, but their assumptions are based on normal investor behavior, and what’s happening right now is anything but normal.
Is this legal?
In a Bloomberg newsletter on Tuesday, Matt Levine wrote: “It might be illegal in all sorts of ways, but it is not obviously illegal, and if the U.S. Securities and Exchange Commission were to go after WallStreetBets for this stuff they will be breaking new ground and going beyond their previous cases.”
