People who buy and sell stocks often bet on which companies won’t do well in the future. As reported by Decrypt, the marketplace will be shut down due to what GameStop described as NFT and cryptocurrency “uncertainty”. The closure seemed inevitable after the retailer shut down its crypto wallet in August 2023. Our range of Recharged consoles from Sony, Microsoft & Nintendo gives you a great entry point to get into the world of Gaming.
- The power of retail traders now seems higher than ever, and social media has been shown to be a remarkably effective method of stock market hype.
- “Part of me is like, if it’s going to the moon, I’m not going to give up my seat, I’ve got my tickets,” she said.
- In the same earnings report, however, the company highlighted a bright spot that e-commerce sales had spiked considerably — increasing some 257% year-over-year.
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And two and a half years later, the overall GameStop story has become a whole lot messier. Believing GameStop overpriced, hedge funds had “shorted” the company, betting the share price would fall. He added that in many ways “there’s really no difference” between what this Reddit army did and what hedge funds or institutional investors do when they see a stock that is mispriced in some way. That history makes the recent frenzy in the shares of GameStop all the more strange.
“But then this sort of technical phenomenon, which is called a short squeeze, that was really sort the dynamite that was thrown on the kindling.” A company worth $1.3 billion on the stock market on New Year’s Eve was worth about $21 billion at the end of last week, roughly the same as Kellogg’s, the cereal maker, which, unlike GameStop, is solidly profitable. “They seem hell-bent on taking on Wall Street, they seem to hate hedge funds and threads are peppered with insults about ‘boomer’ money. This is a massively simplified explanation of something called shorting, or short selling – words you might’ve seen cropping up in your feeds in the last few days.
Everything You Need to Know About the GameStop Story
The “live by the sword, die by the sword” attitude to the hedge funds is, in many ways, revenge for the GFC. GameStop was one of the companies that loads of hedge funds (companies who do these bets) had bet on to lose a lot of value. Short-sellers borrow and sell the stocks when they are valued high betting that the stocks will plummet, hoping that when the price falls, they can buy back the shares, return to the owner and encash the difference. The fact of the matter is there’s still a lot we don’t know about what happened with GameStop and probably never will.
The best way to support GameStop isn’t really to buy GameStop’s stock, it’s to buy something from GameStop, which many people still aren’t. GameStop’s meme status has likely bought the company some time for a potential turnaround, but it hasn’t been a silver bullet. “It’s long past time for the SEC and other financial regulators to wake up and do their jobs — and with a new administration and Democrats running Congress, I intend to make sure they do.”
Dumb Money tells a fun, moving tale of an absolutely wild financial moment
You may have noticed that the stock price of GameStop, a struggling US computer games retail company, has soared from US$96.80 to $347.50 in the past three days – a rise of 359%. Or, more impressively, a rise of 10,692% compared to its price of $3.25 in April 2020. The now-legendary r/wallstreetbets page was started in 2012, according to a Wall Street Journal interview with one of the founders. They were the place where millions of young people could trade in used games, debate the merits of different franchises and get advice from GameStop’s staff, often avid gamers themselves.
There’s also Robinhood, the app that is the unofficial stock trading platform of choice for WSB. It lets people trade stocks and even more exotic investments, like options, for little or no charge. A series of users on the Reddit forum r/Wallstreetbets noticed that GameStop was (a) undervalued by the market and (b) vulnerable to a short squeeze. R/Wallstreetbets is marked out by a devil-may-care approach to shares – its users are keen to gamble big and disdainful of traditional traders. It has evolved its own language and in-jokes, with users openly talking about making dumb decisions and the subsequent coin-toss of losses and gains.
Still, the company reported an operating loss of $63 million in the third quarter. GameStop shares plunged nearly 20% the next day, closing on Dec. 9 at $13.66 a share. But, as with so many retail stars, GameStop began to struggle a decade or so ago as gamers, like everybody else, made more of their purchases on the internet, opting for downloaded games or two-day delivery over a visit to the mall. The demand raised its share price massively, which nobody saw coming, and everyone who had banked on it dropping in value had to buy their shares back. But huge numbers of people in the wallstreetbets Reddit forum swapped tips and bought shares in GameStop.
Examples of Gamestop in a Sentence
While GameStop (GME) has backed away from crypto, the company may still have something new up its sleeves. Last month, the GME board of directors approved a new investment policy that permits CEO Ryan Cohen and the management team to invest in equity securities, among other investments. The new policy will also allow Cohen to personally invest in the same securities as the company. The prior investment policy kept GameStop (GME) restricted to invest excess cash in investment grade short-term income securities. Of note, GameStop (GME) ended its last quarter with a cash position of $909M vs. $804M a year ago. Their upper hand in rallying up the stocks of firms like GameStop and AMC Entertainment was proven after the hedge fund Melvin Capital closed its short position and Citron Capital covered most of its short at a loss of 100 per cent.
GameStop (GME) Earnings Date, Estimates & Call Transcripts
“These big moments like GameStop and Occupy Wall Street, they will keep coming,” she said. “Nobody goes to WallStreetBets thinking that this is a safe place to spend money,” Reddit boss Steve Huffman recently told me. If you believe this theory, you should buy GameStop shares before the cash is sent out – and then ride the wave up.
Traders who have shorted the stock now need to buy the stock to fulfil their obligations under the short – which drives the price up even further. This has nearly bankrupted a few hedge funds, to the delight of smaller investors, mostly organised and egged on by the online forum Reddit. Still, he expressed worry about what comes next — and how GameStop falling will ultimately impact these individual investors and faith in the stock market at large. A few days later, Tyler Winklevoss tweeted a link to reports about the film https://broker-review.org/ and said that when the movie comes out he and his brother will be renting AMC theaters (another popular stock within r/wallstreetbets) for “premiere parties.” “The reason why that’s important is if there’s people betting the stock is going to go down, and if they’re wrong and the stock price gets pushed up, then what will happen is eventually they will capitulate and they will give up,” Moallemi said. “And the act of capitulation is basically to buy back their short position, which will even drive the stock higher.”
Most of the individual investors portrayed are shown as having made money. The amount Gill made isn’t clear, though we see he’s bought his brother a new car, xm broker review an indication he came out ahead. The real-life Gill didn’t participate in the film or in the book it’s based on, Ben Mezrich’s The Antisocial Network.
The GameStop stocks are not only most traded in the US but in India too. The company was among the top five most traded stocks in Stockale, a platform for Indian retailers to trade in US equities, reported Bloomberg. In translating much of the mood of the GameStop saga — which you can brush up on here — Dumb Money succeeds. It was genuinely wild to see the declining mall retailer’s stock price shoot up seemingly out of nowhere — and even weirder to find out it was because a bunch of guys on Reddit willed it so. It was fun to watch the hand-wringing among Wall Street titans and talking heads on CNBC, wagging their fingers that this was all very irresponsible. Not to mention that this all happened as the country entered into year two of the Covid-19 pandemic, when the existential question of each day was when will everything stop sucking, if ever.
GameStop’s Australian division has been focused on increasing higher-margin merchandise and opening more large format hybrid stores which include both an EB Games and Zing Pop Culture store in a single location. These locations have an expanded selection of merchandise based on both games and pop culture. The Sydney Morning Herald reported the diversification into merchandise through the establishment of the Zing Pop Culture brand in 2014 had been vital in keeping the company profitable. The newspaper reported the greater focus on merchandise allowed the company to tap into the lucrative, higher-margin merchandise market of t-shirts, figurines and bobbleheads. The newspaper noted former staff agreed that the Australian divisions’ merchandise pivot has been key to the divisions survival in Australia’s tough retail landscape. The company reported profits of US$9.4 million, US$52.2 million and US$30.6 million for each fiscal year respectively.