Had you plunked $10,000 in GameStop (GME) this year you’d have much to celebrate: $111,619 to be exact. Now you can understand the frenzy over the heavily shorted stock that’s not even in the S&P 500.
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Following a nearly 15% gain the past month to 210.81, shares of GameStop are up more than 1,016% just this year so far. No S&P 500 stock comes even close. The top-performing S&P 500 stock this year is health care company Moderna (MRNA), which is up 278%. Not even Tesla (TSLA) can keep up. Had you invested $10,000 in Tesla in January, you’d have just $10,040. Poor Elon Musk.
And the S&P 500? Forget about it. Your $10,000 invested in SPDR S&P 500 Trust (SPY) would be worth $11,981. The Invesco QQQ Trust (QQQ), is slightly worse, turning your $10,000 into $11,932. Even iShares Silver Trust (SLV), the ETF individual investors jumped into, would only be worth $8,987. Only AMC Entertainment (AMC) did better. It is up 1,988% this year, turning $10,000 into $208,773.
But don’t let the big GameStop stock gains fool you into thinking the company is something it’s not.
GameStop: Not In The S&P 500 (But Would Be No. 369)
GameStop’s prospects aren’t great. It sports a middling 64 IBD Composite Rating. That means its chart and fundamentals only outperform 64% of all companies’ And the company is seen losing money in fiscal 2022, ended in January 2022.
Specifically, GameStop is seen losing another adjusted $48 million, or 67 cents per share, in the July 2021 quarter when it reports results. And this whole fiscal year, analysts think it will lose more than $40 million or 56 cents a share. GameStop sells video games in its primarily mall-based stores. Gamers are increasingly downloading their games online.
Successful investors know it’s better to use time-tested rules to buy top growth stocks instead. Analysts are stumped by GameStop, too. Baird suspended its rating and price target on June 28. “We are temporarily suspending our rating and price target until the company more clearly articulates new management’s business strategy, which should also allow investors to better assess the company’s intrinsic value and prospects for future free cash flow generation,” the brokerage said.
But individual investors are piling into GameStop anyway. That’s pushing the stock higher and prompting large investors betting against it to cover their losses. And that’s making the company worth nearly $16 billion, which is more than about a quarter of the companies in the S&P 500.
There are ways to use options to play GameStop, too. And some are trying to spread their bets in struggling retailers using ETFs instead.
Reading The Message From GameStop Stock
The rally in GameStop is a signal on many levels. It’s a reminder to investors to know how important it is to buy and sell at the right time.
But it’s also showing a shift in the S&P 500 sector leadership. Many beaten-down S&P 500 sectors are finally starting to pull ahead. GameStop stock’s consumer discretionary sector, though, is just the ninth-best among the 11 S&P 500 sectors this year. The Consumer Discretionary Select Sector SPDR (XLY) is up 12.7% this year.
But this year’s top sector? Long-struggling financial. The S&P 500 Financial Select Sector SPDR ETF (XLF) is up 29.7% this year.
Just know while it’s fun counting your newfound riches on GameStop stock and other highly shorted stocks now, you need to have rules to follow when the trade goes the other way.
What $10,000 Invested In Battleground Stocks Is Worth Now
Gains on high-interest and heavily shorted stocks this year
| Investment | Symbol | $10k now | Year To Date Stock % Ch. | Sector | Composite Rating |
|---|---|---|---|---|---|
| AMC Entertainment Holdings, Inc. | (AMC) | $208,773.58 | 1,987.7% | Communication Services | 64 |
| GameStop Corp. | (GME) | $111,618.90 | 1,016.2% | Consumer Discretionary | 64 |
| World Acceptance Corporation | (WRLD) | $18,298.77 | 83.0% | Financials | 89 |
| Tanger Factory Outlet Centers, Inc. | (SKT) | $16,787.15 | 67.9% | Real Estate | 66 |
| Bed Bath & Beyond Inc. | (BBBY) | $16,109.23 | 61.1% | Consumer Discretionary | 67 |
| The Macerich Company | (MAC) | $15,267.10 | 52.7% | Real Estate | 50 |
| AMC Networks Inc. | (AMCX) | $13,614.76 | 36.1% | Communication Services | 71 |
| Ligand Pharmaceuticals Incorporated | (LGND) | $11,621.92 | 16.2% | Health Care | 66 |
| Tootsie Roll Industries, Inc. | (TR) | $11,104.58 | 11.0% | Consumer Staples | 47 |
| National Beverage Corp. | (FIZZ) | $10,553.59 | 5.5% | Consumer Staples | 54 |
| iShares Silver Trust | (SLV) | $8,986.57 | -10.1% | Financials | n/a |
| PetMed Express, Inc. | (PETS) | $8,845.91 | -11.5% | Consumer Discretionary | 21 |
| Invesco QQQ Trust, Series 1 | (QQQ) | $11,932.49 | 19.3% | n/a | n/a |
| SPDR S&P 500 ETF Trust | (SPY) | $11,981.12 | 19.8% | n/a | n/a |
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
