GameStop raises $2.1 billion as "meme stock" traders drive up share price (2024)

FAQs

Why is GameStop stock going up so much? ›

GameStop's stock price surged in 2021 after meme stock investor Keith Gill and a Reddit forum called r/wallstreetbets rallied the public to buy the stock and force a short squeeze. Hedge funds and other investors who had bet on the gaming retailer's failure incurred losses as the stock price rose.

GameStop soon became the textbook definition of a “meme stock,” or a stock whose value was driven more so by social media enthusiasm as opposed to any sort of underlying financial metrics.

The normie GameStop investors who recognized the opportunity for a short squeeze were right — the stock was over-shorted, they saw their chance, and they seized it. The episode took out Melvin Capital — even after getting extra money injected, the hedge fund eventually went under.

Meme Rally In May

Dramatic movements are common in meme stocks like GameStop. Meme stocks rallied in May after meme investor Keith Gill posted on X for the first time since the pandemic. AMC (AMC) soared as much as 308% May 13-14 and GameStop (GME) gained 271% to the peak of the same two-day period.

As of January 28, 2021, the all-time highest intraday stock price for GameStop was $483.00 (nearly 190 times the low of $2.57 reached 9 months earlier in April 2020). In pre-market trading hours the same day, it briefly hit over $500, up from $17.25 at the start of the month.

Gill was one of the main posters on the WallStreetBets subreddit - a thread where Reddit users can post on a particular topic - which drove eye-popping rises in GameStop's stock in 2021. Retail investors bid up the shares, targeting short-sellers, who had been betting on GameStop's stock falling.

“A meme stock is any publicly traded stock with a price performance that's strongly influenced by activity on social media,” according to Britannica Money.

There can be little doubt that meme stocks' average longer-term performance is dismal. Take an exchange-traded fund that was created in December 2021 to exploit the meme stock phenomenon: The Roundhill MEME ETF.

Meme stocks can be bought and sold using an online brokerage account, just like any other stock.

How much did Keith Gill invest in GameStop? ›

In early June, Gill revealed on social media that he had made a significant investment in GameStop, totaling about $181 million in value at the time. It consisted of two parts: 5 million shares of GameStop stock purchased for $21.27, worth approximately $116 million at the time of the post.

Based on analyst ratings, GameStop's 12-month average price target is $10.00. What is GME's upside potential, based on the analysts' average price target? Currently there's no upside potential for GME, based on the analysts' average price target.

GameStop reported net sales of $5.2 billion for its 2023 fiscal year, down from $5.9 billion the previous year. But the company swung to a profit of $6.7 million in 2023, reversing a loss of $313.1 million in fiscal 2022. The latest run-up in GameStop shares will boost its balance sheet.

Some of the most heavily shorted names are seeing rallies in Monday's premarket action, including shares of SunPower and MicroCloud Hologram, up 13%. Those two top the list of the most shorted stocks on MarketWatch's data pages.

For its market cap and overall relevance, GameStop (NYSE:GME) is probably the most famous stock worldwide, and we all know 'why. ' Based on the research presented in this article, I think it is still a dangerous stock for both long-term holding and shorting.

Instead, it was largely retail investors congregating on forums like Reddit's WallStreetBets driving up share prices, with the movement reignited by a series of Sunday and Monday posts to X from “Roaring Kitty,” the account belonging to 37-year-old Keith Gill which became the mascot of 2021's meteoric gains from the ...

Gill “quietly sold and/or exercised (i.e., dumped) all 120,000 of his GameStop call options for a large profit, seemingly to increase his own stake in GameStop stock by over 4 million shares,” Radev said in the suit. GameStop shares have since fallen, though they're still higher than they were before Gill's posts.

As Roaring Kitty, notably, Gill was posting videos at a time when Americans were stuck indoors during the pandemic, leading some to try their hands at investing. To be sure, Gill earned a lot of money after promoting the purchase of GameStop shares, but he also lost big.

Short squeeze is a term used to describe a phenomenon in financial markets where a sharp rise in the price of an asset forces traders who previously sold short to close out their positions. The strong buying pressure “squeezes” the short sellers out of the market.