Electronics Company GameStop: Who Is Winning The Market Battle?


After a volatile run in the first half of this year with highs of $450s and lows of $40s, GameStop (NYSE:GME) stock look to finally be stabilizing at around the $200s. While the share price of the video game retailer remains up over 1,000% year-to-date, the stock on 25th August was floating around $210, less than half its 52-week high of $483 per share. Since June 10th, GameStop’s stock price has almost entirely been trading in a range of $200 to $230, which is about as stable as it has been since it was targeted by retail investors on r/WallStreetBets on Reddit in late January and became the original meme stock.

After GME saw immense media exposure form the likes of Elon Musk,  GME stock jump from $17 up to nearly $500, back down to $40 and up again above $300. GameStop has become one of the most infamous stocks in Wall Street history. The stock exposure has also created new slang sayings such as “to the moon,” “stonks” and “diamond hands,”.

Who is GameStop?

It was only April 2020 when GameStop was a struggling video game and electronics retailer, especially as Covid19 was circulating the globe. As you can imagine, once the pandemic hit, very few people were walking into a GameStop store and buying video games when they could just download them at home. The company had posted $470 million in losses in 2019, eight years after reporting a $340 million profit. Right as the pandemic hit last year, it announced it would close 300 locations permanently.

“GME shorts are going through a short squeeze, and the stock continues to be on of the top stocks in our short squeeze potential metric, which means the squeeze is probably going to continue if its stock price remains at these levels or higher,” Dusaniwsky announced.

Under New Management

In this year’s first half, as GME stock bounced all over the place, the company completely changed its management team. On June 9, GameStop announced that it had hired former Amazon executive Matt Furlong as its new chief executive officer (CEO), and also hired fellow Amazon executive Mike Recupero as its chief financial officer (CFO). The hiring of a pair of experienced Amazon executives was seen as an extremely practical decision amid a sea of irrational stock trading.

“Up until the last several weeks, GME’s trading daily trading volumes and Reddit mentions had declined materially,” noted Nagle. “However over the past seven trading days there has been a resurgence in mentions and volumes which has corresponded with a 56% increase in GME’s share price.” In other words, GameStop does not trade on fundamentals and its share price is highly correlated to how often its name is mentioned on Reddit. But it’s not all about Reddit. Investors are excited about new gaming cycle from Microsoft’s (MSFT) Xbox and Sony (SNE) Playstation.

When does everyone think the real squeeze will be?


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