GameStop’s meme stock status became the stuff of legends in 2021. However, it’s seen only a few notable pops in the intervening years. Is the meme dream still alive, or is GameStop just another brick-and-mortar video game retailer now? Here’s the current situation.
The Legend
The legend of GameStop’s phoenix-like ascent from the dregs of the stock market to the talk of Wall Street is etched on the fabric of history. For the uninitiated, it went something like this. Keith Gill, who goes by “Roaring Kitty” online, helped convince a lot of laypeople on social media that GameStop’s stock was massively undervalued.
Shorting the Outlier
In 2021, it looked like GameStop was cooked. The business had endured a huge downturn throughout COVID lockdowns, and it looked like gamers were pretty much done buying video games digitally. As such, a brick-and-mortar video game retailer looked like a relic of a bygone era and hedge funds on Wall Street shorted the company’s stock. That basically means they put bets on GameStop’s stock losing value by borrowing it at a set price and selling it, planning to pay it back later at a lower price.
Squeezing the Short
It’s a bit complicated, but if enough people buy up a stock after many investors have shorted it, it can create a dynamic known as “squeezing the short.” The simple version goes like this: with the stock price suddenly rising, the people who own the shorted stock ask for their stocks back from the people they loaned them to. This causes a cascade effect as the short sellers have to buy up lots of the stock, sending the shares in question skyrocketing in value.
GameStop Short Went to the Moon
As the GameStop short got squeezed hard in early 2021, social media users flocked to the stock to make some quick money. They also, notably, stated they were excited to stick it to established Wall Street institutions that they perceived as playing unfairly. The legend was born, and an unbreakable bond was forged between some core GameStop believers and their beloved stock.
Why This Mattered
Shorting a stock means that you stand to gain only an amount between the stock’s initial value and zero. If the stock begins to increase in value, a short sellers’ potential losses are actually technically unlimited. The GameStop short squeeze was essentially a perfect storm of social media users dogpiling a very unlucky cohort of investors who lost a considerable amount of money. For many layperson investors, this was the ultimate underdog story.
Back to Earth
Once the short squeeze cooled off, GameStop’s stock returned to normal values. They’ve had somewhat reasonable sales in the intervening years, though things aren’t as good for them as they were in the era before digital video game distribution was widespread. Lately, they’re focusing on selling nerd culture merchandise like action figures and collectibles.
Recent Movements
Keith Gill returned to social media after years away in May of 2024, posting an image of a gamer leaning forward without any other commentary. This sent many GameStop faithful into a frenzy and they snapped up the stock in a small echo of the 2021 rush. Still, the stock was somewhat static before this buying spree, and there was no short to squeeze, so the heights weren’t like they were in the past.
Is That the End?
GameStop stock has fallen since then, and Keith Gill has made no further statements about the company’s shares. Some investors consider the stock too volatile to be a serious investment, while others question the long-term viability of a video game-focused retailer. GameStop’s ventures into becoming an online NFT marketplace or a large-scale online game distributor haven’t gone anywhere, either.
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Should You Invest in it?
It’s impossible to predict the future. As such, there’s no stock you should invest in, as any shares could drop dramatically in price overnight. With that being said, GameStop investors all feel as though they’re uniting against institutional investors. They see their cause as righteous, not just as a way to make money—something that typical investors don’t normally consider when making money moves.
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What’s Next?
With GameStop’s future looking like more of the same, the question of where its stock goes from here is something of a mystery. No one could have predicted its pop in 2021, nor its follow-up mini-explosion in 2024. Still, watch this space. If it’s done it twice, it could do it again. Who’s the say? The next GameStop rally could go straight to the moon.
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