The stock price of GME has risen significantly since descending into a 19-week consolidation last September. Today, however, the stock has fallen by nearly 24% from its high, marking lower highs and further giving up gains. This may indicate that GME stock could face short-squeeze potential, or that there are big-name buyers of GME stock who could be acting as catalysts. However, speculators should watch for reversals in the stock price before investing.
As GameStop’s shares declined on the back of falling video game sales, and its failed investments in smartphone retail, hedge funds pounced on the opportunity. In fact, a user named DeepFuckingValue, who monitors the WSB, noticed that hedge funds had illegally shorted GME stock. Then, millions of WSB users orchestrated a “short squeeze” of the stock. After the short squeeze, GME stock soared, and the move was followed by a huge debate on hedge funds’ role in the economy.
In January 2021, the SEC will begin investigating the price swings of GME stock. They will look into large volume changes, frequent mentions on Reddit, and elevated short interest. In addition, they will closely examine market structure, regulatory framework, and practices, including payment for order flow and digital engagement. Dark pool trading will also be investigated. In addition to investigating GME stock price swings, the SEC will examine the company’s market structure.
While the price of GME stock rose by nearly 30% over the last five years, the company’s executives are weighing whether or not to continue investing in it. In late 2019, a short-squeeze pushed GME stock prices back up. Chewy co-founder Ryan Cohen bought a small amount of GME stock and joined the board. Cohen, however, is leaving the company. Nevertheless, GME stocks remain part of the S&P Midcap 400.
The stock is in a peculiar position in the short-term, and anything can happen. Although historical stock split data can offer some precedent, this should be taken with a grain of salt. If GameStop does lose money, that could be a major blow to the fundamental story of GME stock. But in the meantime, the stock will likely continue to rally. And if GameStop is able to exit the short position and enter the growth sector, GME stock could do the same.
The game retailing industry is ripe for speculative bettors. In the past few months, the popularity of GameStop stock has skyrocketed, thanks in part to a subreddit called “WallStreetBets.” The company’s stock is traded on the NYSE. In order to buy the stock, investors can use a number of trading platforms. Some incumbent trading platforms have a fee.