- GameStop dropped alongside other stocks due to Jerome Powell’s remarks on Wednesday.
- GME stock has found it difficult to break through the $27-$30 barrier.
- Ryan Cohen added another $10 million worth of shares on Tuesday.
- GME has gained 49% YTD despite poor Q1 results.
GameStop (GME) sold off in Thursday premarket once again, a day after the stock fizzled on Federal Reserve Chair Jerome Powell’s admission that rate hikes may resume later in the year. GME stock lost 4.6% on Wednesday and dropped another 1.4% to $25.35 in the premarket. At the time of writing, the meme stock is trading at $25.60, seemingly finding some interim support above $25. NASDAQ 100 futures are up 0.5% on Thursday.
GameStop stock news: Can Ryan Cohen turn this ship around?
On June 7, GameStop was thrown into disarray by the firing of CEO Matthew Furlong. GameStop Chairman Ryan Cohen, long a proponent of the struggling video game retailer since the meme stock heyday of early 2021, was named Executive Chairman.
GME shares have since rebounded from $20 to above $27 in the following four sessions, but the Federal Reserve Chairman’s announcement on Wednesday led to a sell-off. While the entire market was expecting the Fed to pause rate hikes, which is what indeed happened, Powell was clear that this was a “skip” that might very well result in more rate hikes later in the year depending on the trajectory of inflation. With the market expecting Powell to announce that rate hikes were finished for good, if not announce that rate cuts would soon be on the table, stocks sold off across the board.
Ryan Cohen’s purchase of $10 million worth of new GME shares had helped GameStop’s stock price regain its composure after last week’s poor first-quarter results. The results, which saw revenue drop 10% YoY, was the cause of Furlong’s unemployment. Cohen now owns more than 12% of GameStop, and his fierce loyalty to the corporation has kept a number of investors fortifying their so-called “diamond hands”. Cohen now owns 36,847,842 shares of GameStop worth $947 million, which is about one-quarter of the Chewy.com founder’s net worth.
Cohen has his work cut out for him. With five different CEOs in about five years, not one has been able to end the drain on new game purchases. Quarter after quarter, gamers have steadily switched to digital downloads rather than in-store purchases. The most recent quarter did see merchandise and hardware sales increase from a year ago however, so maybe there is an end to the retreat on the horizon.
GameStop stock chart
It is unsurprising that GameStop decided to retract since the stock was within the $27 to $30 overhanging supply zone. This area acted as resistance for the entire second half of 2022, and $27 held firm once again on March 22 of this year. Bulls will need to push GME stock through $30 before a real rally is in the cards. Until then, GameStop stock will continue to ricochet between $20 and $27.
GameStop stock is up 49% year to date, so plenty of traders will continue watching this stock closely. The Relative Strength Index (RSI) did not reach the overbought threshold this past week, so some small-scale buying should continue.
GME daily chart
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