Gamestop (GME) Stock Price and Forecast: This is a fun game!

Update: Gamestop (NYSE: GME) shares were trading 6% higher early on Thursday generating a lot of discussion among retail traders. Citroen research was to stream live on Twitter with a $20 stock price target but ran into technical difficulties. GME remains heavily favoured by retail investors especially the wallstreetbets Reddit forum. Despite the failed stream, bears took over and pushed the stock down 4%, a fall of over 10% from GME’s intraday high on Thursday. GME found support at $37, bouncing to recover some losses. 

Update: Gamestop (NYSE: GME) has dropped by 0.61% on Wednesday, closing at $39.12. According to Thursday's premarket data, another decline is on the cards. One of the factors weighing on the Grapevine, Texas-based firm is a bearish report from Citron. The research firm announced that on Thursday at 11:30 EAstern it will live stream five reasons that at these levels, buyers are "the suckers at this poker game." If Citron makes a convincing case, shares could further fall. It is unclear what these factors are. 

Update: Gamestop (NYSE: GME) shares are trading lower on January 20. Citroen research is generating some noise after it tweeted about the stock. GME continues to be heavily discussed on the /wallstreetbets Reddit site. Looking at the updated 4-hour chart we can see that Gamestop (GME) has just crossed on the MACD, giving a sell signal. The new high from January 13 was not matched by a new high in the RSI. 

Gamestop (GME) is a video game and consumer electronics retailer with a global network of stores selling new and second-hand video games and related products. Shares in Gamestop (GME) suffered in the early stages of the pandemic last March but recovered strongly as investors saw potential from stay-at-home gamers and, the new PlayStation 5 and Xbox releases. GME closed out the year at $18.84.

GME stock: 2021 to infinity and beyond

Gamestop (GME) last week announced that Chewy co-founder Ryan Cohen and two other Chewy executives would be joining GME’s board. Cohen reportedly wants to push Gamestop (GME) to adopt a more online strategy and now with three board seats, he can target this goal more aggressively.

Short squeeze

Gamestop was a well-shorted stock with 68 million shares shorted as of Dec 31, 2020. According to the Wall Street Journal, 138% of the shares were sold short. This kind of massive short-selling can happen, as shares can be loaned by holders more than once. Once the stock started to rally, this short squeeze added to panic buying and the stock rallied 57% on Jan 13. The stock was also popular among the /wallstreetbets reddit community, which numbers nearly 2M users.

Insider selling doesn’t stop the rally

While a short squeeze can make for huge moves, the underlying fundamentals of the stock have not changed. Gamestop reported on Monday last week that revenue for the nine-week holiday shopping season was up 3.1% from a year earlier, but Gamestop (GME) fell 11% on Friday. SEC documents showed three directors sold stock totalling $2.7Mm while one director sold stock for a total value of $17Mm. GME stock then rallied on Tuesday trading above $40 early in the session and trending heavily on the /wallstreetbets reddit chat.

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