GameStop is almost six times more volatile than bitcoin as earnings results jolt retail belief in a turnaround

Trader
Traders work on the floor of the New York Stock Exchange (NYSE) on March 16, 2020 in New York City

  • Shares of GameStop have been nearly six times more volatile than bitcoin, according to data from Bespoke Invest.
  • Over the past 50 days, GameStop has had an average daily price move of 21% compared to just 4% for bitcoin.
  • GameStop was especially volatile over the past week as investors digested its earnings report.
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Shares of GameStop have been subject to extreme volatility over the past few months that far surpasses the price swings of bitcoin, according to data from Bespoke Invest.

Over the past 50-days, the daily average percentage move in shares of GameStop stands at 21%, compared to just 3.6% for bitcoin, according to Bespoke.

Volatility has skyrocketed for bitcoin following the epic January short-squeeze that saw its shares hit an all-time high of $483, and it has remained heightened as investors continue to grapple with the company’s e-commerce turnaround plans led by activist investor Ryan Cohen.

GameStop’s Tuesday earnings report gave investors a lot to grapple with as results missed analyst expectations. The stock saw a subsequent price decline of 34% on Wednesday, followed by a 53% rebound on Thursday as the stock found technical support at its 50-day moving average.

Bitcoin has also seen some choppy trading in recent weeks, as it hovered just below its all-time-high of about $60,000 for most of March. The cryptocurrency was down as much as 7% on Thursday, but has since bounced off the key $50,000 level.

How long the heightened volatility will last in GameStop is anyone’s guess, but if CFRA’s $16 bear case plays out, it could be a while.

“And you thought bitcoin was volatile,” Bespoke said.

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GameStop has fallen nearly 50% from March intraday highs, but ‘diamond hands’ Reddit traders are still holding

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Day traders piled into GameStop stock in January, alerting Wall Street to the power of amateur investors

GameStop stock has fallen nearly 50% from March 10 intraday highs of $348.40, but that hasn’t stopped Reddit traders from holding the stock.

Traders on the popular r/wallstreetbets forum are doubling down their bets on the beleaguered video game retailer despite falling short interest and share prices.

GameStop stock was down as much as 20% on Tuesday before it mounted a recovery. Short interest in the stock has dropped to just 15.77% of its float as of March 16, according to data from Ihor Dusaniwsky of S3 Partners.

Even in face of the bearish news, Reddit traders continued to comment about their “diamond hands” on the GameStop thread of r/wallstreetbets for Tuesday, March 16, referring to investors who hold a stock or cryptocurrency regardless of potential risks, headwinds, or losses. The term is used to represent a group of retail traders’ collective strength in the markets if they act in unison.

A Reddit user going by the name u/darkspherei commented on the March 16 GameStop thread, “upvote if you ain’t selling 💎🙌🦍🚀,” and quickly received nearly 3,000 upvotes.

The online community is attempting to band together once again to “defend” GameStop.

Another commenter on the site going by u/_exordium argued the forum can create a repeat of February’s rise in prices if they band together.

“Don’t forget, in January once it tanked, we all quieted down for a while, but we never f—-‘ left and we never f—-‘ sold. When this place is overrun by FUD and shills, we wait…Hang the f— in there,” u_exordium said.

Despite the rallying cries, and the recent appointment of Chewy co-founder Ryan Cohen to lead a digital shift at the company, shares of GameStop traded down 10.79% as of 11:44 a.m. ET on Tuesday.

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GameStop jumps 14% to resume its climb back to post-short-squeeze levels even as Wall Street recommends ‘sell’

GameStop millionaire Roaring Kitty
GameStop millionaire Roaring Kitty

  • GameStop surged as much as 14% on Friday as it resumed its push to levels not seen since after the epic short-squeeze earlier this year.
  • But Wall Street is not on board with the move, with the average analyst rating remaining a “sell.”
  • “We believe [the] rapid rise up in shares is unwarranted, less about future prospects, and more of a statement about social & economic inequality,” CFRA said in a note on Wednesday.
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The meteoric rise in shares of GameStop continued on Friday, as the video game retailer surged as much as 14% on no official news.

In recent weeks, GameStop has gravitated towards the highs following its late January short-squeeze that saw shares briefly topped out at $483. On Friday, the stock hit a high of $295.50, giving it a market valuation of about $17 billion.

GameStop investors have latched on to the idea that activist investor and Chewy co-founder Ryan Cohen can transform the company into a specialized e-commerce company, and so has the board of directors. Earlier this week, GameStop said Cohen would lead a committee focused on expanding GameStop’s e-commerce capabilities.

But Wall Street analysts remain unconvinced and are sticking with their price targets that suggest more than 90% downside potential in the company.

CFRA maintained its Sell rating on GameStop but increased its price target to $16 from $7, according to a Wednesday note. CFRA highlighted that “no material changes” to its business model were conveyed in the recent announcement about Cohen leading a committee.

“We believe [the] rapid rise up in shares is unwarranted, less about future prospects, and more of a statement about social and economic inequality,” CFRA said, before drawing parallels to the 2011 Occupy Wall Street Movement and the recent rise in Reddit’s WallStreetBets forum.

“In our view, we’re witnessing a ‘Reoccupy GME’ movement, following Feb’s splintering off into silver, dogecoin, and other financial instruments,” CFRA said.

The Wall Street research firm said bearish catalysts that could weigh on GameStop’s share price going forward include earnings on March 23 and “developments in regulatory probe opposing investors,” according to the note.

CFRA isn’t alone in its bearish view on GameStop. Bank of America reiterated its Sell rating on the company on Friday, and the average Wall Street analyst rating on the company remains Sell.

But those bearish views aren’t stopping investors from piling into the stock, which is up 1,280% year-to-date as of Thursday’s close.

Read more: Buy these 30 stocks poised to lead an electric-vehicle revolution that will account for 50% of new-car sales by 2030, UBS says

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New data suggests GameStop’s latest surge is being driven by institutions rather than retail traders

GameStop Clerk
  • GameStop is back above $200, but retail investors might not be behind the push upward in recent sessions, according to VandaTrack.
  • There was no sign “whatsoever” of retail investors driving the price action with net dollar purchases of $8.1 million on Tuesday, says one strategist.
  • The arrival of stimulus checks may spur more retail investors to buy GameStop and other popular stocks.
  • Visit the Business section of Insider for more stories.

GameStop is back in the spotlight with big upside moves in recent sessions, but new data suggest the price action might not be being spearheaded by retail investors as it was during the January rally led by Reddit’s WallStreetBets platform.

In the past two sessions ending Tuesday, the stock had jumped by about $112 to nearly $250 each.

Figures from Vanda Research, which tracks retail investing activity in 9,000 individual stocks and ETFs via its VandaTrack platform, paint a different picture of the most recent rally in Reddit’s favorite meme stock.

“Everybody’s been talking about GameStop,” Viraj Patel, global macro strategist at Vanda Research, told Insider on Tuesday. “You would’ve imagined retail [investors] again were behind that but they’re not because they are buying around a tenth of what they were buying every day of net back in late January,” said Patel who was in London looking at figures from Vanda Research data analytics arm, VandaTrack.

In a tweet on Wednesday, Patel said there was no sign “whatsoever” of a retail-driven short squeeze in GameStop shares.

GameStop shares on Tuesday climbed as much as 28.5% to an intraday high of $249.85. Data from VandaTrack show net dollar purchases on Tuesday were $8.1 million. The shares on Monday popped up as much as 53% to an intraday high of $210.87. On that day, net dollar purchases were $6.1 million.

Patel said there were “big spikes” in daily net purchases by retail investors on January 26 and January 27 when the GameStop retail trade was peaking. On January 26, when the stock soared as much as 95% to $150, net purchases by retail investors were $68.18 million. The following session, the stock rocketed up 157% to an intraday high of $380, with net purchases of $87.48 million, according to VandaTrack. 


Looking at the differences in net dollar purchases in January and the latest rally, “it’s almost as if that gap [appears] to me like it’s a different type of trader or investor behind the recent move,” said Patel. “It’s definitely not retail because these volumes just wouldn’t have the same impact on price compared to what we saw back in January.”

He said the fresh upswing in prices was likely driven by institutions.

Though it could be the culmination of a short-squeeze, with big buyers closing short positions, another possibility could be “a few speculative institutional players – long-short fund managers would be the other type that may like GameStop on a short-term basis, part of the reflation, reopening trade in the US,” he said.

“Given the total volume traded (which still remains significant), we know there’s other types of investors buying/selling. Unlike in [January] where the net purchases by retail account for a bigger share of the total volume,” Patel said in a follow-up email.

Patel expects more retail investors to begin buying GameStop and other popular meme stocks once stimulus checks hit people’s bank accounts as part of the $1.9 trillion coronavirus relief package.

GameStop shares were volatile on Wednesday, marked in part by a brief and sudden plunge of the shares before they turned positive again during the session.

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GameStop stock hit with 6 trading halts as volatility spike results in $176 daily trading range

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GameStop has been the centre of markets’ attention this week


Shares of GameStop experienced a wild trading session on Wednesday reminiscent of the late January short-squeeze that sent shares flying and led to a congressional hearing.

GameStop traded up as much as 41% in afternoon trades with no official news from the firm. The move higher was likely an extension to news earlier in the week that activist investor Ryan Cohen would be leading an initiative to transform the video game retailer into a specialized e-commerce company.

But at around 12:20 a.m., selling in GameStop picked up and the stock plummeted as much as 51% from its intra-day high to $172. Amid the decline, the stock was hit with as many as 6 trading halts before shares recovered.

The $176 trading range in GameStop on Wednesday highlights the heightened volatility that has hit so-called meme stocks ever since Reddit’s WallStreetBets forum began to have an outsized influence on retail investors’ trading activity.

Other stocks like Koss Corp and AMC Entertainment traded up as much as 100% and 55% in Wednesday trades, respectively.

Another round of $1,400 stimulus checks might sustain the volatility in the meme-stocks given that a bulk of people said they would save or invest the funds rather than spend them, according to a recent Bank of America survey.

Shares of GameStop traded up about 2% as of 3:12 p.m.

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US regulators consider rule changes for options trading and short-selling after GameStop frenzy

Elizabeth Warren
Massachusetts Senator Elizabeth Warren

  • The GameStop short-squeeze earlier this year is prompting US regulators to consider potential rule changes for options trading and short-selling.
  • Senator Elizabeth Warren shared responses to her letters from the SEC and FINRA on Tuesday.
  • Both regulators said they are evaluating potential changes to a number of areas impacting investors.
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The epic short-squeeze in shares of GameStop earlier this year is prompting US regulators to evaluate potential rule changes that could impact Wall Street.

GameStop posted year-to-date gains of 2,463% at its peak in late January, as Reddit’s WallStreetBets forum piled into the name in the hopes of squeezing out short-sellers.

Now, Congress and US regulators are reviewing what happened to see if there are any vulnerabilities in the stock market that need to be addressed. Regulators are considering rule changes on everything from options trading, to short-selling and gamification practices by investing apps like Robinhood.

On Tuesday, Senator Elizabeth Warren shared the responses to her previous letters that asked the SEC and FINRA how they planned to respond to the volatility in GameStop. The responses revealed a list of issues the regulators are now examining.

The SEC said it is evaluating if there are any gaps in its market manipulation rules. The agency also said it will “seriously consider” increasing the requirements for brokers that offer options trading, and increasing disclosure requirements for brokers that deal with payment for order flow and for hedge funds and investors that engage in short-selling.

FINRA, meanwhile, said its looking into the gamification of the stock market by investing apps like Robinhood, and whether its current rules adequately address the risks presented by these practices. Both FINRA and the SEC said they are still investigating if there was any wrongdoing related to the meteoric rise of GameStop earlier this year.

“The GameStop controversy revealed how the Wall Street game is rigged in favor of big hedge funds and giant corporations – and how this hurts individual investors and the economy. I’m going to keep fighting for answers, a level set of rules, and a transparent and open market for everyone,” Warren said.

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GameStop rallies above $200 for the first time in a month as transition steps attract new bulls

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  • GameStop rose as much as 19% on Tuesday, climbing above $200 for the first time since February 1.
  • The retailer’s shares have rallied in recent days as its transition to e-commerce business picks up steam.
  • GameStop announced Monday that Chewy founder Ryan Cohen will head a committee tasked with leading the firm’s transformation.
  • Watch GameStop trade live here.

GameStop climbed for a fifth straight day on Tuesday, signaling investors bullish toward the company’s overhaul are sticking to their guns instead of playing the stock for quick profits.

Shares rose as much as 19% and landed above $200 for the first time since February 1. While the level remains well below the $483 peak seen during January’s trading frenzy, shares are still up more than 900% year-to-date and about five times higher than where they stood mid-February.

The upswing follows larger gains made Monday after the company announced board member and Chewy founder Ryan Cohen will head a planning committee meant to usher in GameStop’s transformation. Cohen said in a November letter that the video-game retailer needs to focus on e-commerce business and lean less on physical locations if it’s to survive.

Steps taken since suggest GameStop heeded Cohen’s warning. The company hired Amazon veteran Matt Francis to serve as its new chief technology officer in February. The transition committee is now tasked with hiring leaders for its e-commerce fulfillment and customer care arms, as well as find a new chief financial officer.

The group will also seek opportunities for transforming GameStop into a “technology business” and creating value for shareholders, the retailer said in a press release.

The announcement marks a new phase to the mania around GameStop stock. Shares famously shot higher in January as casual investors uniting online flooded the market with buy orders.

That phenomenon has mostly died out, but participating Reddit traders have replaced their calls of “GME to the moon!” with research into how GameStop can thrive as an e-commerce firm. The crude commentary, memes, and bragging about claimed windfalls remain.

Even Keith Gill, arguably the group’s most famous GameStop bull, has cheered on the latest rally. The investor, known online as RoaringKitty and DeepF***ingValue, posted an update to his position on Monday. The one-day rally allegedly fueled an $8.5 million profit, bringing his total gain to $25.8 million.

Gill gained notoriety online for his early bullishness toward GameStop. Fame gained during the January surge led to his testifying to the House Financial Services Committee on the matter last month.

GameStop closed at $194.50 on Monday. The company has two “buy” ratings, two “hold” ratings, and three “sell” ratings from analysts.

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GameStop spikes 14% after announcing board member Ryan Cohen will lead its transition to e-commerce

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Shares in GameStop rose 14% in regular trading Monday after the company announced board member and Chewy founder Ryan Cohen will lead its strategic transformation.

Cohen has been appointed chairperson of a planning committee that aims to transition the company to an e-commerce business. Members of the committee include Alan Attal, Kurt Wolf, and Cohen himself.

Cohen has been actively pushing for the company to gravitate away from its traditional brick-and-mortar model to an Amazon-like e-commerce titan.

Since the committee’s formation, they appointed Amazon vet Matt Francis as CTO, hired two executives to lead the customer care and e-commerce fulfillment functions, and have been seeking a replacement for prior CFO Jim Bell. Bloomberg reported earlier on Monday Cohen would be tapped for the role.

Shares in GameStop rose more than 1,600% in January after a wave of Reddit-fuelled retail traders rebelled against Wall Street hedge funds that were betting against the stock. 

Shares were up as much as 14% in regular trading at $157.05 per share.

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GameStop bucks market sell-off with 19% surge as Reddit chatter picks up

Reddit

Shares of GameStop surged 19% on Thursday, bucking a broader market slump amid a massive sell-off as the chatter on Reddit appeared to gain traction yet again. 

Wiping out its earlier losses, GameStop rose to its highest level since the beginning of February, when the frenzy surrounding the video game retailer lost steam following the massive short squeeze that drove prices up in January.

The spike Thursday came later in the session, when several Reddit users on the Wall Street Bets subreddit began posting consecutively, rallying behind the stock. 

Among the most popular posts was published on Thursday morning saying “GME IS UNSTOPPABLE,” which received more than 10,000 upvotes, the equivalent of “likes” on other social media platforms.

At around the same time, Ryan Cohen, a GameStop board member, tweeted a photo resembling a stuffed toy from a Pets.com advertisement. Some users in the comments interpreted the post as a positive outlook for the video game company.

GameStop closed higher by 6.10%, at $131.76 on Thursday. 

Other meme stocks such as AMC Entertainment and Koss however joined the rest of the market, closing lower for the day. The Nasdaq 100 erased gains for the year, plummeting from its February 12 peak.

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More GameStop-like short squeezes could be up ahead in the ‘fragile’ stock market, says a market research veteran

GameStop Clerk
  • The GameStop short-squeeze that shook markets in January probably won’t be the last of its kind, according to Wellington’s Owen Lamont.

The GameStop short-squeeze that shook markets in January probably won’t be the last of its kind, according to Wellington Management’s Owen Lamont. 

The market researcher said he anticipates more short squeezes in the future in illiquid names and “little corners of the market,” on an episode of the Exchanges at Goldman Sachs podcast published Wednesday.

“It seems to me that we’re in a market where prices are moving a lot. It’s probably not that horrible if a couple stocks every now and then go crazy. But I’m more concerned about the whole system being fragile,” he said. 

The price of GameStop’s stock surged in January after investors rapidly purchased shares of the highly-shorted video game retailer, causing short sellers to close their positions and drive the stock’s price up even higher. Lamont said this squeeze was different from ones throughout history, like Volkswagen in 2008, because GameStop’s price was driven up by “many small traders,” as opposed to a few large players. 

“The events of January just made it seem like our system is more fragile,” Lamont said on the podcast. 

He emphasized that short-squeezes are rare in well-functioning, liquid markets, and there shouldn’t be a scenario in which prices are moving so much in response to sentiment changes. 

The long-time academic researcher explained the concept of “noise trader risk,” where traders make market prices move round but rational traders who don’t want to bear the risk exit. 

“In that story, volatility begets volatility,” Lamont said. “And the crazy prices in volatility are a self-reinforcing cycle. So, I’m not sure whether it’s the illiquidity that’s causing the volatility today, or the volatility that’s causing the illiquidity. But somehow, we’re in a situation where market prices, at least in a handful of names, seem out of whack.”

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