GameStop shares halted after rallying 100%

By Cameron Micallef

February 25 2021
Share

The GameStop saga looks set to continue, with the bricks-and-mortar gaming company rallying over 100 per cent in a single trading session.

Shares in GameStop (GME) were halted with less than 30 minutes remaining in the US trading session, after buyers pushed the price of the shares up 104 per cent to US$91.71.

GME’s share price had seen small rises throughout the day before catapulting after 3pm New York time, forcing the company to close early.

GameStop garnered worldwide attention after finding itself at the centre of last month’s “gamma squeeze”, when amateur investors utilised social media platform Reddit to coordinate their strike against Wall Street, driving the retailer’s price up by as much as 2,400 per cent.

This time around, the flurry of activity has led to an outage on Reddit’s WallStreetBets forum, the centre of last month’s craze.

Wall Street hedge funds lost billions in January after betting GME shares would fall, before a group of enthusiastic amateur investors propped up their value by selling the stock hard, borrowing stock and short-selling it.

The Reddit community, which has 2.8 million members, is full of users urging each other to keep pushing the stocks higher.

Key players from last month’s gamma squeeze, including Notorious retail investor Keith Gill, Robinhood, Citadel, Melvin and Reddit have all testified to a US financial services committee for their role in the saga.

But the latest surge will be without GameStop chief financial officer Jim Bell, who has announced he will resign on 26 March.

“Mr Bell’s resignation was not because of any disagreement with the company on any matter relating to the company’s operations, policies or practices, including accounting principles and practices,” GameStop said in a filing with the Securities and Exchange Commission (SEC).

RMIT’s senior lecturer of finance, Dr Angel Zhong, told nestegg the latest rally appears to be off the back of Mr Bell’s resignation.

“This change is interpreted as a positive signal to change the fundamental aspect of the company. The market seems to be positive on the future growth of the company,” she said.

However, the finance lecturer has warned investors against trying to capitalise on GameStop’s rally.

“I would like to also remind investors that: do not buy due to fear of missing out or irrational herding. While it is sensible to act on news and/or company announcement, but timing is also an important element. You may act on a news release at a wrong time, when the price has already reached the upper limit,” she concluded.

About the author

Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

sections

sections

sections

sections

sections

sections

sections

Invest