The GameStop stock prices have skyrocketed, thanks to some clever investors on Reddit. The company has consistently been losing money over the past few years and 2021 has them on track to lose even more. Gamers are able to download material straight from their consoles and don't really have to go into a store to get their games anymore, though there are still players who enjoy getting the physical discs. The public health crisis has also put a major strain on business. However, GameStop is now doing better than they ever imagined, though this will more than likely be extremely short-lived.
This morning, users on the WallStreetBets subreddit started aggressively touting GameStop's volatile stock. Shares quickly doubled, but that was just the beginning. At the beginning of 2021, the stock price was hovering around the $20 mark. Last week, shares rose to $40 and even $73, thanks to the Reddit users aggressively pushing the stock. Over the weekend, the price shot from $60 to $150, and at points, even higher. The surging stock prices began to seriously benefit people who had bought in at $20 or even below, and it all started by one person claiming that they wouldn't sell until the price hit $1,000 on Reddit.
Some investors were able to make some serious money, thanks to the GameStop stock surging. According to CNBC, "more than 175 million shares has already changed hands, far surpassing its 30-day average trading volumes of 29.8 million shares." People were cashing out and making anywhere from a few hundred dollars to six figures. One investor claims to have made $11 million, thanks to their bullish activity on Reddit. Telsey analyst Joseph Feldman had this to say.
"The sudden, sharp surge in GameStop's share price and valuation likely has been fueled by a short squeeze, given the high short interest, and, to a lesser degree, speculation by retail investors on forecasts for the new gaming cycle and the involvement of activist RC Ventures. We believe the current share price and valuation levels are not sustainable, and we expect the shares to return to a more normal/fair valuation driven by the fundamentals."
While this stunt from Reddit proved to be profitable for some, it can have a very dangerous impact the investors who were not paying attention and just lost a lot of money. It is believed that the stock price will once again hit the $20 mark, which means that anybody who purchased today and holds on to it is bound to lose. Earlier this month, it was announced that investor and Chewy co-founder and former CEO Ryan Cohen is joining GameStop's board, which also helped fuel stock prices.
In the end, GameStop will benefit from this stunt. The company has expanded and sells a lot more than just video games these days. Funko exclusives drive collectors into the shops and keep them buying online, while they look for other ways to diversify. The 2020 holiday season saw a 5% boost in overall sales, while online, GameStop saw a boost of 300%. You can head over to Reddit and see how the stock market had all eyes on GameStop this morning.