NASDAQ draws global news with sudden stock upsurge of Gamestop from incumbent price levels to all-time twin peaks highs, what industry spin doctors today would refer as a market stock resurrection proven by big-ticket statistics, dealt within opportunistic parameters of trading market compliance.
by Alexander Solomon
GameStop Corp. is an American video game, consumer electronics, and gaming merchandise retailer. The company is headquartered in Grapevine, Texas (a suburb of Dallas), United States, and is the world’s largest video game retailer, operating 5,509 retail stores throughout the United States, Canada, Australia, New Zealand, and Europe as of February 1, 2020. The company was founded in Dallas in 1984 as Babbage’s, and took on its current name in 1999. The company’s retail stores primarily operate under the GameStop, EB Games, ThinkGeek, and Micromania-Zing brands. The company declined during the mid-late 2010s due to the shift of video game sales to online storefronts and failed investments by GameStop in smartphone retail.
In 2021, the company’s stock price skyrocketed due to a short squeeze orchestrated by users of the Internet forum/wallstreetbets. The company received major media attention during January and February of 2021 due to the volatility of its stock price. In early March 2021, the company’s stock price rose significantly again, likely due to changes in its executive-level staff and prospects of a changing business model. (reference from Wikipedia)
On January 15, 2021, Forbes published article, “With 138% Short Interest, Board Change Sends GameStop Stock Soaring” that stated – Financial theory says that the price of a stock instantly reflects all the available information about the current value of its future cash flows. The recent stock price behavior of GameStop GME-1.9% shows the cracks in that theory.
GameStop — which sells video games mostly through physical stores — enjoyed a 57% pop in its stock price on January 13, according to the Wall Street Journal.
This rise happened despite a 30% decline in revenues for the most recent quarter, negative free cash flow and no forecast for the future, according to GameStop’s third quarter earnings conference call transcript.
On March 3, 2021, Reuters published “Roaring Kitty’ in GameStop saga testifies before Massachusetts regulators” stating; The social media persona “Roaring Kitty,” whose online posts helped spark January’s trading frenzy in GameStop Corp (NYSE:GME) shares, appeared before Massachusetts securities regulators on Wednesday to testify as part of an examination into his activities.
Massachusetts Secretary of the Commonwealth William Galvin, the state’s top securities regulator, last month subpoenaed Keith Gill, who touted GameStop stock in his spare time while he was a registered broker and working at the insurer MassMutual.
He was a key figure in the so-called “Reddit rally,” which saw shares of GameStop surge 400% in a week before crashing back to pre-surge levels. Galvin’s spokeswoman said Gill was giving testimony virtually in response to the subpoena.
By late January, Gill, known as “Roaring Kitty” on YouTube and “DeepF***ingValue” on Reddit, was up over 4,000% on stock and options investments in the company, with his GameStop position plus cash worth nearly $48 million, according to his Reddit posts.
Seeking Alpha published on March 11, 2021. “GameStop, Koss, AMC stocks still volatile, but magnitude of moves diminishing” with 38 insertions at correct time of this cover.
These are some of the highlights.
- GME is up 3% following a volatility halt yesterday as shares hit a wall near $350 and then fell sharply to around $200 before closing up around $250.
- Options contracts betting GME would end at $300 this week and $800 next week were among the most active yesterday.
- Michael Pachter of Wedbush Securities says that to support a trading price of $235, GameStop would need to earn between $10 and $12 a share annually on a sustainable basis.
Disclaimer: This is not a paid or sponsored article. The sources and information quoted are to correct time of reference. Opinions herewith are not intended to market make or manipulate trading interests of any parties. Readers may/may not forecast trading decisions from these findings. The writer bears no responsibility to market adjustments due from publish of this report.
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Alexander Solomon is an independent industry commentator and the author of adventure novels ‘Aces High @ 23 Wall Street’ and ‘F-A-M-E ‘ze Great’. He has worked in Singapore Police Force, Singapore International Monetary Exchange, Singapore Exchange, Mediacorp and Philip Capital.
Alexander Solomon LLP 