Short seller of
Stock just squeezed. Shares of the videogame retailer gained nearly 94% on Wednesday, though the gain rose to around 57% during market closing.
In an email to Baron’s, Ihor Dusniewski of S3 Partners pointed to optimism after news on Monday that Chevy co-founder Ryan Cohen and two other former Chevy executives were joining the board of directors of Gametops (ticker: GME). According to Dusaniwsky, the holiday appeared to trigger “a long purchase tsunami,” paired with the sales results.
Baron’s It has recently been noted, citing short-selling data from S3 Partners, that the stock was primed for a small squeeze when the stock’s demand rises slightly as investors begin to cover bets. We rush that the price will fall. Given the industry trends such as the growth of free-to-play online games, investors have placed bets against Gametop stocks. The growing trend of consumers buying online games rather than buying copies at stores has left the company’s physical disk business in a strange place.
With increasing competition from e-commerce sites and large retailers like
(TGT), it will likely take a bold new strategy to turn things around for GameStop. To investors, it appears that Cohen and company may place a bet.
According to Dow Jones market data, more than 143.5 million shares of GameStop were traded through Wednesday’s close. The stock rose 57% to close at $ 31.40, its highest level since August 2016.
According to S3’s Dusaniwsky, short sellers were making $ 812 million less on the market for the day.
Dusniewski wrote, “Although I recognize that we are seeing some scars that their position has ended due to the mass mark-to-loss in the market. It is a question of chicken and eggs.” Rather the opposite.
Dusanzewski did not expect a large drop in stocks over the next few days, noting that short sellers made $ 968 million in 2020 mark-to-market losses, rather than exits, short sellers actually Has increased its positions.
Ronnie Moss of Standpines Research downgraded shares from Buy to Down after the move. Moas said he recommended the name on December 29, 2016, when the stock was trading around $ 25.
He wrote, “I can no longer give up this most connected recommendation, which has been described as a recent absolute and relative step.” ”
GameStop had a good share of a day’s pop in stock. A deal with
A 44% rally began on 8 October, but analysts said it sounded like a mundane cloud-based infrastructure announcement. Even with some profit-sharing on Microsoft’s Xbox Game Pass Ultimate’s GameStop sales, it didn’t move the needle.
“The profit share helps but the shift to digital may not lead to increased sales / profits. And, more digital means still less prevalent [games]The Biggest Profit and Loyalty Driver [for GameStop], “Credit Suisse analyst Seth Sigman wrote at the time.
Write Connor Smith at [email protected]