Gamestop’s stock price a battle of big vs. little
A head-scratching David and Goliath story is playing out on Wall Street over the stock price of a money-losing video game retailer.
An army of smaller-pocketed, optimistic investors is throwing dollars and buy orders at the stock of Gamestop — in direct opposition to a group of wealthy investors who are counting on the stock price to plunge.
The resulting action is wild, with Gamestop’s stock soaring nearly 145 percent in less than two hours Monday morning, only for the gains to disappear quickly afterward.
The struggling company has lost $1.6 billion over the last 12 quarters, and its stock fell for six straight years before rebounding in 2020.
Though it might seem like a strange place for the locus of so much movement, Gamestop has been a target of many professional investors, who say the company will continue to founder as sales of games continue to go online.
These investors have been betting that Gamestop’s stock will fall. They “shorted” the stock, which means they borrowed shares and sold them, hoping to buy them back at a cheaper price and pocket the difference. But such bets have been disastrous recently.
A cavalcade of smaller investors, meanwhile, has been exhorting each other on the internet to keep the stock’s momentum flying. Many are pitching it as a battle of regular people versus hedge funds and big Wall Street firms.
The meteoric rise pushed some short sellers to get out of their bets, done by buying shares of the stock, and that helped accelerate its momentum even further. On Monday, the push and pull was so extreme that trading in Gamestop’s stock was temporarily halted at least nine times for volatility.
Gamestop was trading at less than $18 a few weeks ago. It closed Monday at $76.79, after swinging between $65.01 and $159.18 earlier in the day.