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The return on highly shorted stocks is currently the highest ever recorded, he said. Still, the rally of heavily shorted stocks has taken place against a “backdrop of very low levels of aggregate short interest,” he added, though noted there could still be significant losses for hedge funds. But lately it’s been more about inflicting pain on short sellers, hedge funds and other big financial firms. Many talk about it in terms of evening the ledger with the financial elite, who benefited from years of gains as other people fell further behind.
The primary reasons GME stock spiked briefly were the return of Gill and his show activtrades forex broker analysis of support for the company and its CEO. The company’s income statement performance is less impressive. First quarter 2024 net sales fell 40% from the prior-year quarter. The quarterly net loss, however, improved to $32.3 million from $50.5 million.
More than four million people are in it, usually discussing stocks and shares and where they’re going to invest money. After seeing Dumb Money, I reached out to a managing director at a major hedge fund I’ve talked to off and on for years to get his read on whether GameStop really changed anything. His fund probably pays a little more attention to retail and Reddit than they did in the past — they tend to do better in stocks with high retail activity. In his mind, Goliath is still very much winning, and David is maybe a bit delusional. 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. Meme stocks tend to prompt consternation and confusion among normie market participants, but then that’s just part of the fun.
- Gill publicly touted GameStop stock long before it caught the eyes of Wall Street and the world.
- The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security.
- This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system.
Over the past month, the Zacks Consensus EPS estimate has remained steady. Shares of the video game retailer have appreciated by 33.73% over the course of the past month, outperforming the Consumer Discretionary sector’s gain of 9.85% and the S&P 500’s gain of 3.76%. The fact of the matter is there’s still a lot we don’t know about what happened with GameStop and probably never will. It’s also not clear what will come of it; not much has happened on the legislative or regulatory front yet. The momentum to create a more level playing field for smaller investors in the stock market post-GameStop didn’t really go anywhere because there wasn’t an easy place for it to go. In translating much of the mood of the GameStop saga — which you can brush up on here — Dumb Money succeeds.
GameStop timeline: A closer look at the saga that upended Wall Street
Earlier that day the share price had soared to nearly $350 (£250) times more than this time last year. Trading options involves greater risks but also offers the potential for higher profits. Savvy traders mitigate these risks through ongoing education, strategic trade adjustments, utilizing various indicators, and staying attuned to market dynamics. Keep up with the latest options trades for GameStop with Benzinga Pro for real-time alerts. Looking at the volume and open interest is a powerful move while trading options.
Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $900 million, down 16.54% from the year-ago period. The movie divides its cast pretty neatly among Davids and Goliaths. Head David In Charge is Keith Gill/Roaring Kitty/DeepFuckingValue, played by Paul Dano, the GameStop devotee who found himself at the center of the 2021 storm after months of posting videos about his belief in the stock. Dumb Money plays some of Gill’s real-life hits, including one video where he jokes about dipping a chicken tender — a nod to Redditspeak where “tendies” indicate market gains — into a glass of champagne as GameStop’s price rises. 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.
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A Closer Look at GameStop’s Options Market Dynamics
Last month, a Deutsche Bank survey, external of 430 retail investors found they planned to put 37%, on average, of any stimulus cheques directly into equities. “They seem hell-bent on taking on Wall Street, they seem to hate hedge funds and threads are peppered with insults about ‘boomer’ money. This is a massively simplified explanation of something alpari forex broker review called shorting, or short selling – words you might’ve seen cropping up in your feeds in the last few days.
GameStop’s most recent balance sheet dated May 4, 2024, included more than $1 billion in cash and marketable securities. Operating leases and other long-term debt totaled about $400 million. To quantify that erosion, GameStop’s annual sales in 2023 were $5.2 billion, 42% lower than 2011 annual sales of $9 billion. The company’s annual sales in 2020, when the Covid-19 pandemic temporarily shuttered stores, was $5.0 billion—only slightly lower than last year’s performance.
When it comes to playing around with high short interest stocks, unless you are uncommonly lucky, let’s just say the risks greatly outweigh the rewards. “The smart money already got in, and probably got out,” Pachter told Ars Technica. So real, in fact, that President Biden’s economic team and U.S. Treasury Secretary Janet Yellen are “monitoring the situation,” White House press secretary Jen Psaki said Wednesday. 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 Tesla chief executive has some 44 million Twitter followers and was already a popular figure among users of the Reddit forum — especially as Tesla stock soared in recent years despite questions over the company’s actual valuation.
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Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zacks Ranks stocks can, and often do, change throughout the month. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations. Zacks may license the Zacks Mutual Fund rating provided herein to third parties, including but not limited to the issuer.
Our experts picked 7 Zacks Rank #1 Strong Buy stocks with the best chance to skyrocket within the next days. 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. “We are excited to bring our customer-obsessed mindset and technology experience to GameStop and its strategic assets,” Cohen said in a statement at the time. Still, the company reported an operating loss of $63 million in the third quarter.
With the stock price high, many people will feel like that gamble has paid off. “My sense is hedge funds are like, ‘Oh, they’re going to get excited again, maybe we can ride the thing up’. And that, in turn, is having a real-world effect on the share price right now.
Not to be cliché here, but GameStop didn’t exactly change the game. In 2021, the surge in trading was driven in part by investors’ attempt to achieve a short squeeze. Under that scenario, investors drive a sudden spike in the price, forcing a surge of additional share purchases from others who want to cover their previous bet that the price would fall. Catherine Brock covers investing, stock market news and inside bar trading strategy related money matters.