The gaming retailer’s value shot up over 50%.
Video game and pop culture retail chain GameStop has seen an unprecedented rise in its stock value in the last week. The retailer has been struggling in recent months due to a combination of difficulties caused by the COVID-19 pandemic and multiple corporate decisions that led to mass consumer and investor disapproval. However, last week, in a seemingly perfect coincidence, the stock was squeezed on both ends by short-sellers and users from the WallStreetBets subreddit. This resulted in a short squeeze in which shareholders were forced to continue buying in order to prevent the value from dropping.
This mysterious surge has carried over into today, as GameStop share values were up 51% this morning before a temporary halt. Once trading resumed, values quickly shot up again, hitting at least 36% by 10 AM. While the rise seems to be continuing, experts are cautioning against staying in the game for too long.
“They’ll try to go in and short the stock, and then the stock rallies 10%, and they cover. And then what happens is it becomes a perpetual short squeeze machine,” trader Brian Shannon told Yahoo Finance.
“If you look at short interest numbers, they’re rotating extremely fast right now. It’s a game of musical chairs. If you’re involved in it, if you’re looking to short it, wait for it to break down. There’s no such thing as up too much, “ Shannon added.
GameStop shares are up about 85% today https://t.co/dHzLXDi6kN pic.twitter.com/HUndLlgr2o
— Bloomberg (@business) January 25, 2021
At time of writing, shares are still on the rise, though many veteran analysts and investors believe it is only a matter of time before they come crashing back down. These opinions have been pushed back against by users of WallStreetBets, who seem eager to push the surge as far as it can go.
“We are investors who put safety and family first, and when we believe this has been compromised, it is our duty to walk away from a stock,” Citron’s managing partner Andrew Left wrote in a letter posted on Twitter.