The GME Saga Continues

I am quite comfortable saying that nobody in 2020 could have predicted GameStop’s stock movements this year. The company was on the decline and heading for bankruptcy, so why would anyone be betting on it?

Before this year, the decrease in demand for physical games and the growing digital market destroyed GameStop’s business. The company suffered massive losses and had begun to make cuts in upper management. 

Regional managers were being given more responsibility despite being understaffed, and stores had begun closing down. 

That’s why GameStop focused on a transition from a physical disc retailer to a merchandise one. This change might not even be necessary now. 

What Happened with GameStop?

If you’re unaware of just what went down with GameStop stock, here’s a quick explanation:

Hedge funds were shorting GME to create a profit. That’s nothing too out of the ordinary, if not a little morally questionable. However, the popular Reddit forum WallStreetBets got a hold of this information and organized a massive movement of people investing in GameStop. 

This destroyed these hedge funds’ short positions and lost them a lot of money in the process, which was the movement’s entire point. 

However, the knock-on effect of the group trying to “stick it to the man” is that the inflated GameStop stock has lost all sense of value. It has risen to absurd rates and helped many investors make a lot of money in the process. 

Most people believed that the stock was done with the volatility, but that isn’t the case. 

GameStop Stocks Surge 100%

Despite the frenzy being over for GameStop, the stock surged over 100% on the 24th of February amidst the news that the company’s CFO had resigned. 

The Chief Financial Officer is believed to have stepped down in order for the organization to capitalize on the recent spikes in value as it begins to move to an e-commerce focused business model. 

This is backed up by a series of large GameStop investors, each of whom did not sell their position during the GME frenzy due to their belief in the long-term potential of the stock.

While the current value of GME is far from being what it was at the height of its popularity, it is a noticeable jump in value that was not based on any sort of manipulative tactic. As a result, it’s possible that we’re seeing a new price correction for GameStop, something which may come as a welcome surprise to many investors. 

GameStop on Track for Second Best Week

GameStop is actually on track for its second-best week ever, according to these closing numbers. It’s unclear if the rise is going to result in a second rallying call from the popular Reddit forum, but there has already been an increase in discussion around the stock. 

GME may still be too volatile to move into, although it has managed to maintain the sudden sharp increase in value as of Friday the 26th of February. 

If GameStop does stabilize at this level, it’s difficult to say what’s next for the stock. It’s caught in this limbo state that has everybody guessing. 

Regardless of where GME goes from here, the lasting impact that the Reddit fiasco had on the trading world is going to be felt for years to come. It has created a divide amongst traders, and it’s inevitable that we are going to see a repeat of what happened at the start of 2021.