Regular investors have openly rebelled against the deep-pocketed hedge funds that viewed GameStop as a mall-based dinosaur, destined to go the way of the record store. GameStop shares spiked nearly 70 percent Friday, closing out at $325 per share — a tumultuous week on Wall Street with a more than 400 percent gain.
They contend that moving away from physical stores and toward e-commerce, mobile gaming and streaming could reverse the company’s spiraling financials. GameStop has lost money in five of the past six quarters, and said revenue fell 30 percent in the most recent three-month reporting period.
Enthusiastic traders also figured that if the stock price rose, all the giant funds that had brazenly bet against the company would get crushed by the weight of being wrong. This, they intuited, would trigger a cycle that would further elevate the company and enrich the everyday trader at the expense of the Wall Street establishment. Regular investors have followed the same trading playbook with such brands as AMC Entertainment, BlackBerry, and Nokia, among others.
What to know
- Why is GameStop stock rising?
- What is GameStop’s ‘short squeeze’?
- How are trading companies responding to the frenzy?
- How are investors responding?
- How are lawmakers and government officials reacting to the situation?