However, they also pointed to the pre-owned games segment as a major part of its success.[110][111][112] GameStop’s Australian division has been the only profitable segment of the global GameStop business for the 2020, 2021 and 2022 fiscal years. The company reported profits of US$9.4 million, US$52.2 million and US$30.6 million for each fiscal year respectively. B Acquired Electronics Boutique Holdings Corp. (“EB Games”), a United States-based video games retailer operating approximately 2,300 stores expanding GameStop’s operations in/into Australia, Canada, Europe, New Zealand and the United States.
- The arrival of Cohen as a shareholder seemed to herald a bet on e-commerce, but the company had logistical problems aggravated by supply chain bottlenecks and posted a disastrous Christmas quarter to close the 2021 fiscal year.
- GameStop’s low share price, thanks to the shorters, made it relatively easy for a large number of people to buy in with little money.
- Austerity remains the recipe, but there is no clear strategy in sight to offset the unstoppable decline in video game sales and competition in the e-commerce sector.
- A short squeeze happens when a stock price that was expected to fall, instead rises.
“I’m actually hosting a meeting later this morning with top regulators at the SEC and the Commodity Futures Trading Commission, and also the Federal Reserve to discuss recent developments,” Yellen told ABC News’ Robin Roberts. “We really need to make sure that our financial markets are functioning properly, efficiently, and that investors are protected.” Treasury Secretary Janet Yellen publicly addressed the saga during an interview with “Good Morning America” on Feb. 4, saying she was meeting with regulators to discuss if the agencies need to take “further action.”
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In a July 27, 2020, YouTube video posted to his channel, Gill said, “Some people won’t even tune into the stream right now when they hear I’m bullish on GameStop, at the current price point it’s traded at about four bucks right now.” Attal was the former chief marketing officer at Chewy, and oversaw its rapid expansion from three people to more than 10,000 employees. Grube was the formerly the chief financial officer at Chewy, among other executive roles in the e-commerce space.
The manager of hedge fund Melvin Capital also on Wednesday admitted to CNBC that the fund was letting go of its GameStop shorts. Sources familiar with Melvin Capital confirmed to ABC News that the hedge fund lost 53% of its total investments in January. “In this sort of Wall Street bets culture, people take screenshots of how much money they’ve made or lost to kind of show off,” he said. “And as they sort of advertised that, people started piling into the trade and the momentum built.” Gill also posted screenshots of his GameStop portfolio on r/wallstreetbets as far back as 2019. Gill and other members of the forum also cited the bullish GameStop stance of Michael Burry, the legendary trader who was portrayed by Christian Bale in the 2015 film “The Big Short,” as fuel for their investment choices.
Most of the traders who have been piling into the stock are likely chasing easy profits, and probably do not care whether GameStop’s strained business could make a miraculous turnaround. The frenzy for the troubled retailer’s stock has been a head-scratcher for the analysts who try to determine a company’s value. J Acquired Geeknet, Inc. (“ThinkGeek”), a United States-based online and wholesale Pop Culture retailer. G Acquired Simply Mac, Inc. (“Simply Mac”), a United States-based Apple specialty store retailer. But GameStop was the perfect target, and many of these other stocks are not as shorted nor as popular. Hi Shelley, you and more than $6bn of lost hedge fund money are asking the same question.
But that GameStop is still operating and putting up a fight to ensure its future viability is already more than many expected three years ago. Other meme stocks that experienced speculative movements, such as Bed, Bath & Beyond, have succumbed to bankruptcy and ruined their shareholders. “It was not because we wanted to stop people from buying these stocks,” Robinhood wrote in a company blogpost. Gill publicly touted GameStop stock long before it caught the eyes of Wall Street and the world.
F Acquired Free Record Shop Norway AS (“Free Record Shop”), a Norway-based record store retailer operating 49 stores. GameStop’s low share price, thanks to the shorters, made it relatively easy for a large number of people to buy in with little money. Some bought in believing in the stock, others because they thought it was funny – GameStop was easily memed thanks to many Reddit users’ fond memories of the chain. The upward spiral was halted in the short-term by some more than dubious moves, but the market has been passing judgment on a daily basis.
GameStop shares plunge as traders dump stock
Vanderbilt professor White told ABC News that this “David versus Goliath” saga “reflects a lot in our society” amid a pandemic that has exacerbated income inequality. The video Citron posted highlighting reasons GameStop will fall has since been deleted from the firm’s YouTube page. Gill did not immediately respond to ABC News’ request for comment, though he told the Wall Street Journal last week that he “didn’t expect this.”
After a drama-filled week that gripped the nation, the entertainment industry outlet Deadline reported that the saga was already being turned into a movie that was being produced by Tyler and Cameron Winklevoss (of “The Social Network” fame). “Market participants should be careful to avoid such activity,” the statement added. “Likewise, issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities.”
But this does look set to change the game of short selling forever, and that will have huge ripple effects. The power of retail traders now seems higher than ever, and social media has been shown to be a remarkably effective method of stock market hype. Essentially, on the stock market, you can bet on a share price falling rather than rising, by “borrowing” shares and selling them at the current price, with the obligation to buy them at a later date, at whatever price they have then reached. GameStop, before the frenzy, was one of the most shorted shares on the US market, as a range of funds bet that it would slump during the pandemic.
The plunge from the high mark is almost 90%, but the stock is still worth more than three times what it was when the speculative fever began on social media. “We expect that eventually GameStop stock price will come down and some people will lose money when that happens for sure,” he said. “And my fear is that they’ll view the stock market as being rigged and not being fair, and that they won’t invest in the stock market.”
Jan. 11, 2021: GameStop appoints 3 new directors to its board, including co-founder of e-commerce giant Chewy
The company’s performance declined during the mid-to-late 2010s due to the shift of video game sales to online shopping and failed investments by GameStop in smartphone retail. In 2021, after retail investors on Reddit noticed that the short interest exceeded 100%, the company’s stock price skyrocketed from $17.25 to over US$500 per share. According to the SEC report, this volatility was only in part due to the shorts covering their positions, but mostly thanks to the massive buying power of retail investors. The company received significant media attention during January and February 2021 due to the volatility of its stock price in the GameStop short squeeze. The company is now ranked 577th on the Fortune 500.[3] GameStop also owns and publishes the video game magazine Game Informer. The arrival of Cohen as a shareholder seemed to herald a bet on e-commerce, but the company had logistical problems aggravated by supply chain bottlenecks and posted a disastrous Christmas quarter to close the 2021 fiscal year.
A lot of sentiment on r/Wallstreetbets celebrates the fact that the rush on GameStop is no different from the dotcom bubble, the property bubble, or strategic drops in the traditional financial media. Stonk is essentially just a funny way to say “stock” – and once you understand that, it explains everything else that has happened. The meme itself started circa 2017 with this absurdist, funny cartoon and it has now become the default lingo of r/Wallstreetbets.
Still, the company reported an operating loss of $63 million in the third quarter. GameStop shares plunged nearly 20% the next day, closing on Dec. 9 at $13.66 a share. In early December, GameStop reported that net sales plummeted in the third quarter of its fiscal year 2020, down more than 30% compared to the same time period in 2019. The retailer attributed this drop in sales to a number of reasons, including an “11% reduction in the store base.”
What is GameStop, where do the memes come in, and who is winning or losing?
This exact scenario also can’t apply to other stocks that don’t have a significant percentage of short sellers, or that aren’t down in the dumps. Reddit forums trade tips on anything from bodybuilding to relationships and finances, but this one is about risky stock market investments. It’s been around for years – offering a highly variable level of return to its members.
“This has captured the attention of America and every trader and non-trader alike,” Left said. He added that he respects the market and has “respect for the people on the Wall Street Bets and on Reddit message https://www.wallstreetacademy.net/ boards.” Left of Citron Research made the announcement in a YouTube video, saying Citron Capital let go of the majority of their bets that GameStop stock would fall and took a “100%” loss in doing so.
