Proving lightning can metaphorically strike twice, GameStop stock has jumped all the way back into the triple digits in a matter of hours. The stock boomed yesterday despite bad news hitting the company a day prior, meaning no one can really wrap their heads around why it is soaring. The reason might be even more inexplicable than the last time the company’s stock price skyrocketed.
Last month, GameStop stocks exploded all the way up to $400 a share following a coordinated effort from the WallStreetBets subreddit. The subreddit realized the stock was heavily shorted (essentially, Wall Street was betting against the stock) and they realized they could win big if they just artificially pumped the stock up, ensuring it didn’t fall below its $20 share price at the time. Quickly, the stock hit triple digits and was an unstoppable force. Tesla CEO Elon Musk even helped the cause, but the stock came crashing down after brokerage apps like Robinhood halted buying shares in the stock. The stock fell down to the $40s, but then something magical happened.
GameStop’s stock went from about $40 to about $170 yesterday. It was unexplainable as the company’s CFO, Jim Bell, had “resigned” but then, a report from Business Insider came out suggesting the CFO was actually forced out by the board. Notable investor Ryan Cohen had reportedly “lost faith” in Bell and wrote a letter to the board in November, expressing displeasure in the company. “Through our private conversations, we have explained to Mr. Sherman and the Board that GameStop has the ability to pivot toward becoming a technology-driven business that excels in the gaming and digital experience worlds,” Cohen wrote. “But this pivot requires the type of strategic vision that has not yet taken hold in the c-suite or boardroom.”
“GameStop needs to evolve into a technology company that delights gamers and delivers exceptional digital experiences,” Cohen continued in the letter, “not remain a video game retailer that overprioritizes its brick-and-mortar footprint and stumbles around the online ecosystem.” These new developments will likely prove to be very notable in the upcoming films being developed on the GameStop ordeal. The stock price of GameStop is hovering around $100 at the time of writing, seeing a pretty notable fall in the afternoon. That said, it’s still more than double its price from days earlier. Whether or not the stock will hold remains to be seen, but if it does, it could be a massive win for investors who continued to hold the stock and buy it at its low price for the last few weeks.
The initial aftermath of the January short-squeeze resulted in Congress hearings. A notable member of /r/WallStreetBets, doubled down on the stock despite pending lawsuits, at the hearings saying he does see tremendous value in it. Hedge fund members and Robinhood’s CEO, Vlad Tenev, would dodge questions and actively upset those asking questions. During the current stock price explosion, Robinhood was very clear to communicate it wasn’t interfering with the stock and any halts were done by the actual stock exchanges as per regulations.
Source: Business Insider