Where are GameStop stocks now?
GameStop stocks? I’ve heard of that before…
Yes, we have all heard of the infamous meme stock - GameStop stocks. Here is a summary of the Legacy of GameStop...
GameStop is a brick and mortar software retail company that sells new and pre-owned video games, consumer electronics, and wireless services. It operates in the United States, Canada, Australia and Europe with more than 4,000 stores and a stable e-commerce platform.
Starting from the 90s, GameStop (or Babbage’s at the time) was referred to as the “video game hub” as it was a place where gamers could interact with other customers and GameStop employees about the latest video games. Bought by Barnes and Nobles in 1999, GameStop increased their number of stores by 400. It was safe to say GameStop was doing quite well.
However, in the early 2010s things changed for GameStop. Their competition - Amazon. Best Buy and other retailers introduced their own concept of trade-in offers online. Several efforts to combat the competition, nothing seemed to work for GameStop. Online games were rising and GME was plummeting. With the world going digital, GameStop simply didn’t agree and instead invested in two retail businesses with nothing to do with video games - Spring Mobile and Simply Mac. However, these expensive liabilities couldn’t turn their leaf as well. With PS4s, Xbox and free online multiplayer games such as Fortnite gaining the spotlight, GameStop was bleeding and their stock price dipped to 15.85 USD by the end of 2019. It was clear that the world had moved on from physical stores. With the load of 5,800 still in GameStop, they lost 673 million dollars in April 2019. In 2020, with Covid-19 infecting the world, GameStop hit a new low of 3.18 USD.
January 2021 - Enter Redditors
The infamous Subreddit - r/WallStreetBets - took a sword against hedge fund managers. These hedge fund companies employed a tactic of short selling as they believed that the GameStop stocks would drop even further. The redditors of WallStreetBets were ready to hit 2 birds with one stone - making some serious money, and watching some wealthy investors lose some serious money. How did they do that? They employed the exact opposite tactic as the hedge fund managers and invested heavily into GME, raising its price to an all-time high of 483 USD and making a 1000% on their investments. And this is when GME acquired its new name - a meme stock.
Still a meme stock?
Can we still call GameStop a meme stock? Well, now it's in the hands of how GameStop plays the game. There are two ways a meme stock can lose the “meme” from its name. First is if the internet gets bored with the meme they may simply lose interest and stop investing. This can happen because the r/WallStreetBets redditors were not buying stocks because they saw future potential in GameStop rather they were doing it over some possible sentimental value and/or to show that big-time institutional investors are not the main show in the stock market. It was simply a meme. However, another way is for the company to convert this gained capital into business ramifications for future growth. This would mean that the stock is no longer overvalued rather it justifies its value because of the company’s growth. This way they wouldn’t have to rely on a bunch of redditors.
What's the news of GME today?
After the Reddit saga, GameStop sold over 5 million shares, gaining 1.13 billion USD. GameStop was ready to make full use of this push they received.
With the sudden surge in price, the obvious step for GameStop was printing more stocks at this price and creating some serious capital. And so they did. They conducted 2 ATM offering programs and on June 22nd, their stock price jumped another 12.7%. They gained capital and squeezed out short-selling hedge funds. An ATM or At The Market offering program is when a publicly-traded company sells newly issued shares into the trading market at prevailing market price to raise their capital over a certain period of time. They announced that they would use this capital for initiatives to boost growth.
Gamestop is speeding up its e-commerce transformation and has been hiring several executives for its new board, with Matt Furlong as CEO. Several are former Amazon executives (ironic right?). As of May 2021, GameStop announced that they had paid off all of their debts. This was a huge step for them.
As of now, their GME stands between 150 to 300 USD consistently, which is quite a step up from 5 USD. Their main goal has been to the digital transformation of their business. It's too early to say whether they will succeed or not, but one thing is for sure, GameStop is very much alive.
Source: Google
A New Era - Meme Stocks to stay and Short Sellers to fear
This event can be marked as one of the strangest but revolutionary events in the stock market, but it may turn out to be a new normal. Short selling investors have to take way more caution because this event proves that this is no longer a business that occurs in 10 story buildings by men in Armani suits, the average middle-class investor can change tides in the stock market as well. Short sellers will always have the risk of betting against the wrong retailers as they never know who the internet may support.
Written by Aryan Jain | Proofread by Alexey Dudarev
