GameStop’s stock is up an impressive $1,068% so far this year.
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GameStop stock dropped suddenly Monday morning, prompting a brief halt due to volatility. The stock fell wider than 15% to as low as $223.00, bounced back, and then fell even lower.
Shares of videogame retailer GameStop (ticker: GME) this month have surged back near their late January levels this month. At the close, GameStop stock was down 17% to $220.13.
The company said last week that Chewy (CHWY) co-founder Ryan Cohen and former Chewy executive Alan Attal were joined by Kurt Wolf, managing member and chief investment officer of activist investor Hestia Capital Management, on a new board committee aimed at transforming GameStop into a technology business.
Cohen kicked off GameStop’s run by building a roughly 13% stake in 2020 and urged the company to pivot more toward e-commerce offerings. He joined the company’s board with two associates in January, sending GameStop shares parabolic in the weeks that followed. Analysts pointed to speculative options activity and the closing of some aggressive bearish bets from hedge funds.
Last month, GameStop announced the planned departure of Chief Financial Officer Jim Bell. A person familiar with the matter told Barron’s at the time that the company thought it was the right time and was looking for a new executive with a technology background.
GameStop’s latest run began following a Feb. 18 Congressional hearing on trading of its stock and Robinhood. The hearing included an appearance by Keith Gill, the YouTube personality known as RoaringKitty, who has developed a following for his successful long position in GameStop stock dating back to 2019; Gill revealed in a Feb. 19 post that he doubled his GameStop holdings.
While some analysts are upbeat about the company’s turnaround prospects, the highest price target listed by FactSet is $33. That analyst, Telsey Advisory Group’s Joseph Feldman, pointed to valuation concerns, despite his “high fundamental expectations and projected multiyear benefits from the transformation.”
The company said it will report fiscal-fourth-quarter results next week. Like other so-called meme stocks favored by retail traders, such results present a risk to the company’s sky-high run-up. That said, trying to call a near-term top for GameStop has been a fool’s errand, especially for short-sellers facing unlimited downside.
Write to Connor Smith at [email protected]
