Why GameStop Stock Rallies Again

GameStop Shares Move Above $200 As Traders Remain Interested In “Meme” Stocks

Shares of GameStop have recently gained strong upside momentum and managed to get from $165 to $225 in just two trading sessions.

There is no clear catalyst for the move, but the stock continues to enjoy strong interest on WallStreetBets, and it looks that the recent upside move was triggered by interest from retail traders.

The previous rally took place back in late May – early June, and the stock made an attempt to settle above $345. However, GameStop stock lost momentum and moved towards the $145 level at the beginning of August before rebounding towards the $225 level.

What’s Next For GameStop Stock?

Analysts expect that GameStop will report a loss of $0.56 per share this year and a loss of $0.03 per share in the next year, so the analyst community remains skeptical about the company’s ability to get back to profitability in the near future.

However, the company’s stock has become a playground for individual traders and hedge funds after it became a “meme” stock back in early January, so the stock’s trading dynamics depend on traders’ interest rather than on the company’s financial performance.

Another “meme” stock, AMC Entertainment Holdings, also rallied in recent trading sessions, which indicates that interest in the “meme” stock topic is very much alive.

In this light, GameStop shares may have a good chance to gain additional upside momentum in the upcoming trading sessions in case they get more support in social media while individual traders and hedge funds bet that the current rally will be as strong as rallies that we’ve seen in March and early June.

However, traders should keep in mind that GameStop’s market capitalization remains detached from fundamental reality, and the stock often drops fast when the initial wave of interest from traders gets weaker.

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