×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Tags: gamestop | meme stocks

GameStop Soars 40% on Short Squeeze

GameStop Soars 40% on Short Squeeze
Gamestop company logo is displayed on a screen as traders work on the floor of the New York Stock Exchange during morning trading on March 22, 2023. (Michael M. Santiago/Getty Images)

Wednesday, 22 March 2023 10:39 AM EDT

Meme stock GameStop Corp. (GME) jumped nearly 50% in early trading on Wednesday as the video game retailer's first profitable quarter in two years squeezed bearish investors and ignited a surge in other stocks popular among retail traders.

At 10:30 a.m, EST, the stock was up $41.3%, traing at $25.00.

AMC Entertainment Holdings Inc. gained 5.3%, while Bed Bath & Beyond rose 7.5%. Both shares, along with GameStop, were at the heart of a meme stocks frenzy in 2021 driven by small investors coordinating on social media.

MEMES ON THE RISE

Among other stocks popular with retail investors, Koss Corp. climbed 9.5%, while the Roundhill MEME ETF rose 4.2%.

Grapevine, Texas-based GameStop, in which billionaire investor Ryan Cohen holds a majority stake and serves as chairman, recorded a 16% decline in costs during the quarter and surprised Wall Street analysts with a profit.

Investors saw this as an early sign of turnaround for GameStop, whose core business of selling new and pre-owned videogame disks is shrinking as consumers move to downloading games digitally or streaming.

GameStop was the most-touted stock on investor-focused social media site stocktwits.com.

The stock hit its highest level in more than four months with 12.7 million shares changing hands in the first 15 minutes of trading, among the top five most traded U.S. stocks.

"Luckily, this go around is not due to meme investors, but an actual tangible fundamental event," said David Wagner, portfolio manager at Aptus Capital Advisors.

"Short interest has been a driver in this stock for quite some time and that will also be the case today."

SOURING SHORT BETS

When there is a rush of demand from short sellers looking to exit their bearish bets amid a rise in a stock's price, it pushes prices even higher, resulting in a short squeeze.

Carvana Co., another stock with high short interest, jumped 20% after the used-car retailer said it expects a smaller core loss in the current quarter.

Short sellers betting against GameStop have lost $610 million since the start of the week, analytics firm Ortex estimated, adding that about 24% of GameStop's publicly available shares were in short position.

Wedbush raised its price target on GameStop's shares to $6.50 from $5.30 after the results, as the brokerage believes the lower cost structure reduces the risk of ongoing losses.

However, "longer term, the company cannot save its way to prosperity," Wedbush analyst Michael Pachter said.

"I would continue to bet my first born male that this company will be irrelevant in the coming few years," said Wagner, who doesn't have a position in GameStop.

© 2024 Thomson/Reuters. All rights reserved.


StreetTalk
Meme stock GameStop Corp. jumped nearly 50% in early trading on Wednesday as the video game retailer's first profitable quarter in two years squeezed bearish investors and ignited a surge in other stocks popular among retail traders.
gamestop, meme stocks
431
2023-39-22
Wednesday, 22 March 2023 10:39 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved