GameStop Isn't Dead Yet
It's happening again. On Wednesday, Feb. 24, GameStop shares doubled, posting significant gains for the first time since its recent crash, MarketWatch reports. Denizens of r/WallStreetBets are predictably ecstatic, with some of them posting millions of dollars in gains.
But why is GameStop stock (GME) going up again? Ask a dozen analysts and you'll get at least a dozen different possible answers. According to The Guardian, some believe that it may relate to a tweet about an ice cream cone. Some people believe the image in question is a veiled message from Ryan Cohen (major GameStop shareholder) that he is about to rescue the failing brick-and-mortar retailer — fixing it in the same way that McDonald's might fix its ice cream machine.
Others believe that a secondary Reddit rally may be the root cause; a wave of newcomers to the GME extravaganza may be pushing up the market price. And, of course, r/WallStreetBets, the subreddit where the action all started, is likely to stick to the explanation of, "We like the stock."
Back in January, GameStop began trending when its shares suddenly jumped from $40 to $150, primarily due to antagonism between Reddit retail traders and hedge fund managers. Hedge funds had shorted the stock to an extreme degree, leading many Reddit users to conclude that the stock was underpriced. They then initiated an unprecedented short squeeze that kept the price going up and up — until it eventually peaked at over $300.
What followed was a whirlwind of twists and disruption, as brokers rushed to stop trading GME and GME kept climbing. The entire debacle ended with GameStop plunging back down, and a movie about the whole thing is in the works. It seemed as though the hype was over, just as congressional hearings regarding the situation were about to kick off.
But despite that tumultuous ride, as of Feb. 25, GameStop shares are once again over $100.
According to FastCompany, this latest surge may have little to do with Reddit, and everything to do with the fact that GameStop recently got rid of its Chief Financial Officer. Rumor has it that the aforementioned Ryan Cohen, who is known for having made the pet e-Commerce site Chewy a success, will be taking his spot. Some have theorized that Cohen's involvement with the company could mean that things are finally looking up for GameStop, and this surge in shares may be a side effect of that speculation.