GameStop’s long and intense reign in the stock market has collapsed following the disappointing results of the company’s earnings call.
GameStop it’s in the news once again, but on a sour note. GameStop shares have rallied incredibly high over the past few weeks, following GameStop’s big short contraction in January. Although stocks slumped again after a week of market chaos, they rose again towards the end of February.
In early 2020, GameStop was one of the shortest stocks on the market, meaning that large investors, such as hedge funds, were betting that the stock price would fall when the company was in its late stages. After a flurry of speculation surrounding GameStop, a group of Reddit users realized that they could make GameStop stocks soar by investing lots of cash in them, forcing hedge funds to hedge their shorts. , which would cause the stock to go even higher. It ended up crashing again after brokerages limited trading on GameStop, but there was still a slight throb in stocks. About a month later, GameStop exploded once again when the company’s CFO walked out and learned that Chewy.com CEO Ryan Cohen would help transform GameStop into an e-commerce retailer.
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Since then, the company has gone very high, even approaching the stock price of $ 400 at one point, but all good things must come to an end. The company made an earnings call today that outlined GameStop’s transformation into an e-commerce platform, but also noted that last quarter earnings were below expectations (via The street). Given the pandemic, it’s no wonder GameStop is struggling, but many hoped that somehow the business would get a pass from Hail Mary and somehow come out ahead. Retail investors have been waiting for the earnings call, believing it would catapult the stock further, but unfortunately, it did the opposite.
GameStop shares fell more than 15% after trading hours, leaving them at $ 154 a share. It’s unclear if enthusiasm for the company can cause it to skyrocket again, but it’s still incredibly high in value given it was about $ 20 a share earlier in the year. Perhaps there is enough goodwill toward the future of the company for people to continue to hold the stock, as analysts suggest GameStop could still fight bankruptcy.
It is likely that since lightning has already struck twice with GameStop, there is a possibility that it will continue to remain up to three digits. It is unknown if it will rise strong and fast as before, but it is not unlikely that you could see a slow and steady profit, even if some feel the stocks are overvalued. The general holding of the stock has proven to be successful so far and if there are enough people who are not willing to sell, it could retain its value simply out of stubbornness.
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Source: The street
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