While there’s still no definitive reason to buy GME stock, its recent breakout from a long-term downtrend appears to be a bullish sign. It has successfully back-tested the break-out from late March’s high, and is now seeking higher highs. The short squeeze that occurred this week has sparked a controversy on hedge funds and their role in the economy. Let’s review this story in detail.
First, there was the classic pump and dump case, which started on Reddit. This story involved a key figure named DeepF***ingValue. In December 2020, a Massachusetts securities regulator decided to investigate him. The company’s stock plunged from US$11 to just four by March 16, 2020. That’s when hedge fund Melvin Capital entered the market by shorting the stock, hoping that it would go bust. The company recovered, with stock prices surging to $483 by March 2020.
This strategy is becoming more common. Many meme stock followers don’t care about fundamentals and only act to short the stock. They are primarily interested in the price movement, and the ability to profit from free market mechanisms. The stock price rise in GME has led to more than 750 percent returns since December 2020, and GameStop stock has been boosted by online popularity, online fan loyalty, and FOMO. The sustained price levels have gone against the notion that meme mania would be short lived.
A bullish short squeeze could lead to a massive move in GME stock. The stock has recently been boosting its popularity thanks to a subreddit called WallStreetBets. However, this stock is still a good buy for retail investors. And as long as the short squeeze occurs, it could be the best time to take advantage of GameStop stock. You can purchase GameStop stock through a Canadian online broker. If you want to invest in GME stock, you must make sure the brokerage you choose has access to the US markets. In some cases, you can even take advantage of commission-free trading.
The SEC is looking into GME stock after huge price swings. It will examine large volume changes, frequent mentions on Reddit, and elevated short interest. They will also investigate market structure, regulations, and practices, including dark pool trading. And finally, they’ll investigate the potential for illegal short-selling in GME stock. You’ll get the first scoop on the latest developments. If you’re a stock market veteran, it might be time to start short-selling GME.
It is important to note that the price of GME stock can increase despite the upcoming split. However, it shouldn’t impact the overall value of the company. As long as the company doesn’t lose money, it is likely to continue rallying. If GameStop enters the growth sector, it could be a good opportunity to invest in GME stock. So, while GameStop stocks are currently in a peculiar position in the stock market, this is not a reason to buy GME stock.