NEW YORK (AP) — It’s not just you. What’s going on with GameStop’s stock doesn’t make sense to a lot of people.
The struggling video game retailer’s stock has been making stupefying moves this month, wild enough to raise concerns from professional investors on Wall Street to the hallways of regulators and the White House in Washington.
The frenzy hit new heights Thursday when several trading platforms limited their customers from making certain trades with GameStop.
It’s all forcing hard questions about whether the stock market is in a dangerous bubble and whether a new generation of traders should be allowed to take full advantage of all the tools and free trades available on their phones, regardless of how reckless they may seem to outsiders. At the same time, champions of the 99% are cheering louder from the sidelines, saying the moves mean that hedge funds, Wall Street and the 1% are finally getting their comeuppance.
Here’s a look at how we got here:
WHAT IS HAPPENING WITH GAMESTOP’S STOCK?
It’s been maniacal this month. After sitting around $18 three Fridays ago, it doubled in four days. It kept shooting higher, before nearly doubling on Tuesday and then more than doubling again on Wednesday to $347.51. On Thursday, it gave back a chunk of those gains and finished the day at $193.60, down 44%. But it’s still up an amazing 928% through the first few weeks of 2021.
AND THE COMPANY ITSELF?
It’s still struggling. GameStop, based in Grapevine, Texas, sells video games at more than 5,000 stores, and the pandemic has been keeping customers away. More worrisome is the long-term shift by customers away from brick-and-mortar stores and toward buying games online.
Enthusiasm has grown for GameStop’s prospects after the company said earlier this month that a co-founder of Chewy, the online seller of pet supplies, was joining its board. Investors see Ryan Cohen helping GameStop’s digital transformation. But analysts still expect GameStop to keep losing money in its next fiscal year.
REDDIT IS INVOLVED, RIGHT?
Yes, particularly those in a group called “WallStreetBets.” Their discussions are full of ideas for the next big trade to jump on, self deprecation and an appreciation of both winning and losing bets, as long as they’re bold. They’ve recently been encouraging each other to keep buying GameStop and push it ever higher, or “to the moon.”
THAT ALONE PUSHED THE STOCK UP MORE THAN 1,000%?
No. A big reason for that is how deeply hated GameStop’s stock was by hedge funds and other professional investors on Wall Street. Many were betting on GameStop’s stock to fall by “shorting” it.
WHAT’S A SHORT?
