GameStop Video 09.03.21.
GameStop Stock Is Rallying
GameStop shares are once again moving higher. Last week, the stock closed at $137.74, and it is currently trying to settle above $230.
The stock gained upside momentum when Bloomberg reported that Ryan Cohen, who founded Chewy.com, will lead the company’s push for increased presence in the e-commerce space.
GameStop mania started when the company entered into a deal with Cohen’s RC Ventures LLC back at the beginning of this year. Traders have originally bet that Cohen will be able to improve the business of the struggling brick-and-mortar retailer, but speculators’ attention has quickly shifted to the huge short interest in the stock.
While the short interest has significantly declined from levels seen back in January as hedge funds exited their short bets with huge losses, it remains at elevated levels and provides fuel for another squeeze.
It should be noted that trading volume is much lower during the current rally compared to the levels we’ve seen back in January, but traders’ interest in the stock has been steadily increasing in recent trading sessions.
What’s Next For GameStop?
Analysts expect that GameStop will not be able to return to profitable operations anytime soon so the stock continues to move higher on speculative activity rather than a significant change in fundamentals.
The strength of the current rally will depend on the number of traders that will be ready to bet on increased interest for GameStop shares at current levels. The previous rally was stopped near the $500 level, but it remains to be seen whether the current upside move will be able to get that strong as the number of forced buyers (short-sellers who face margin calls) has clearly decreased together with short interest.
Traders should be prepared for huge volatility in the upcoming trading sessions as the stock will likely attract new players after the recent move.
For a look at all of today’s economic events, check out our economic calendar.