In the months that followed, Cohen and his firm RC Ventures beefed up the board of directors, introducing new key personnel with strong IT and e-commerce backgrounds. Ryan Cohen, the founder of the world’s largest online retailer for pet supplies, Chewy, which he ultimately sold for US$3.35 billion, bought a 13% stake in GameStop, making him the largest individual shareholder. GameStop was having a tough time until a new investor came along in September 2020. Considering the already fierce online competition, pandemic related lockdowns and declining footfall harmed the company’s prospects. Although the company engages in e-commerce activities, one of its unique selling points was the ability to visit a store, test recently released games, and exchange used items for store credit. The company is active in the US, Canada, Australia, New Zealand and Europe. GameStop is a US brick-and-mortar video game retailer selling primarily gaming consoles, games, peripherals and ancillary services. What’s more, in a recent episode of Trading WTF, host Michael Buchbinder and guests Steve Ward and Jamie Saettele analysed the behaviour behind the frenzy. Although we don’t offer stock trading nor recommend jumping into any investment based on hype and fear of missing out, what took place is deeply fascinating, so we decided to cover it on our blog. On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.The recent GameStop ($GME) short squeeze situation dominated the news cycle for a few days in January and February this year and has been a recurring topic in the business and finance news journals. At the same time, it’s wise to stay out of the trade when it comes to GME stock. What you can do is keep tabs on GameStop’s financials. Just be patient, as haste can be very costly in the world of investments. The company still has to prove to the skeptics that it can remain profitable throughout 2023. Insider buying activity and short squeeze possibilities aren’t, by themselves, compelling reasons to invest in GameStop. So, Will GME Stock Prove the Skeptics Wrong in 2023? From now on, what GME stock investors should want to see is not just one, but multiple profitable quarters. GameStop experimented with NFTs and e-commerce sales in 2022, but halted those efforts recently. ![]() ![]() GameStop admitted in a Form 10-K, “Revenues earned from our digital asset wallet and NFT marketplace were not material to the consolidated financial statements for fiscal 2022.” The ball is in GameStop’s court, but that puts the burden of proof on the company rather than on the skeptics. GameStop needs to demonstrate, that its refocus back to brick-and-mortar sales is successful, and not just once but over multiple quarters. Also, insider buying may be encouraging, but it shouldn’t be enough to convince people to wager their hard-earned capital on a stock.Īt the end of the day, the bottom line should be the bottom line. Are the short squeeze potential and insider buying activity enough to persuade you to invest in GameStop now?įrankly, buying a stock in hopes of an imminent short squeeze isn’t a viable long-term investment strategy. Now, it’s time for serious investors to ask themselves a question. GameStop Director Alain Attal purchased 1,500 shares of the company’s stock. GameStop Chairman Ryan Cohen bought 100,000 shares of GME stock last year. Moreover, this isn’t the only evidence of insider buying at GameStop. ![]() It’s also worth noting that Director Larry Cheng bought 5,000 shares of GameStop through Cheng Capital LLC, after having previously purchased 4,000 shares of GameStop. So, a huge share-price pop could occur at any moment, without warning. ![]() The “Squeeze Score overlays the significant components for a squeeze, higher financing costs and unrealized losses,” according to Ihor Dusaniwsky, S3’s managing director of predictive analytics. Always remember, short sellers can lose more money than they have in their account if a short position goes against them.Īnalysts with S3 Partners gave GME stock a perfect Squeeze Score of 100. Short-Selling GME Stock Is a Dangerous PropositionĮven if you’re a skeptic of the company, this doesn’t mean you should take a short position against GameStop.
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