GME stock has been soaring in recent months, topping both General Motors and General Mills. After Citron Research predicted that GME’s stock price would return to $20, GME’s shares have outperformed both companies in the subreddit. The company’s recent acquisition of Chewy, a petfood startup, has fueled investor enthusiasm. Several former employees have also posted recollections of working at GameStop.
The IBD Composite Rating (IBD) for GME stock is 51, lagging behind more than half of its peers. A CAN SLIM investment paradigm favors stocks with Composite Ratings of 90 or higher. GME stock has a score of 51, which means that the stock is not performing well in terms of fundamentals and is not a good pick. If you’re a big fan of the CAN SLIM investment paradigm, you should avoid GME stock.
It is important to control risk, especially when investing in volatile stocks. Although GME stock is a speculative play, it’s likely to become a sustainable winner if it can continue to consolidate and retrace on its recent highs. While GME’s price may continue to decline in the short term, there are a few factors that you can use to take advantage of this stock’s reversal.
Short-sellers were caught off guard when GME stock surged over 1,600% in January. This buying spree was coordinated on online message boards, catching the “shorts” off-guard and leaving them with unlimited losses unless they bought the stock. The resulting buying spree fueled gains even more. In addition to short sellers, the SEC is also investigating payment for order flow and digital engagement practices. Dark pool trading has also been examined as a potential market dynamic.
GameStop stock rose sharply in January 2021, as investors hailed its turnaround from a shaky state and lambasted hedge funds for short-selling the company. This stock fell sharply due to restrictions from its broker, but has since rebounded. GameStop stock’s EPS Rating is 44 out of 99, which is below the 80-percent level that leads the S&P 500 index.
The massive short interest in GameStop stock has primed GME for a rally. Additionally, GameStop recently announced that it plans to cut its shares into smaller pieces. GameStop hopes the new split will increase liquidity and allow retail investors to buy fractional shares of more expensive stocks. But there are risks associated with such a move, and GME stock could be a good bet for short-term gains. If the stock split is successful, the company will see an increase in shares.