GameStop Stock Plummets After Earnings Call

GameStop’s long and intense reign on the stock market has come crumbling down following disappointing results from the company’s earnings call.

GameStop is in the news once again, but on a sour note. GameStop stocks have been rallying incredibly high over the last few weeks, following the great GameStop short squeeze in January. Even though the stock came crashing back down after a week of chaos on the market, it surged once again toward the end of February.

At the start of 2020, GameStop was one of the most shorted stocks on the market, meaning big investors like hedge funds were betting on the price of the stock going down as the company was on its last legs. After a flurry of speculation around GameStop, a bunch of Reddit users realized they could make the GameStop stock skyrocket by investing heaps of cash into it, which would force the hedge funds to cover their shorts, causing the stock to go up even more. It ended up crashing again after brokerages limited trading on GameStop, but there was still a slight heartbeat in the stock. About a month later, GameStop exploded once again as the company’s CFO departed and word that CEO Ryan Cohen would be helping transform GameStop into an ecommerce retailer.

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Ever since, the company has been riding high, even nearing a $400 share price at one point, but all good things must come to an end. The company held an earnings call today that outlined GameStop’s transformation into an ecommerce platform, but also noted that the last quarter’s earnings were below expectations (via The Street). Given the pandemic, it’s no surprise that GameStop is struggling, but many had hoped that somehow the business would pull a Hail Mary pass and somehow come out ahead. Retail investors have been waiting for the earnings call, believing it would catapult the stock even higher, but unfortunately, it did the opposite.

GameStop’s stock fell over 15% in after hours trading, leaving it at $154 a share. Whether or not the enthusiasm for the company can lead to it skyrocket again is unclear, but it’s still sitting at an incredibly high value given that it was about $20 a share at the start of the year. Perhaps there’s enough goodwill toward the future of the company that people will continue to hold the stock as analysts suggest GameStop could still fight off bankruptcy.

It’s likely that since lightning already struck twice with GameStop, there’s a chance it’ll continue to hold itself up into the triple digits. Whether or not it will rise hard and fast like it has before is unknown, but it’s not unlikely that it could see a slow and steady gain, even if some feel that the stock is overvalued. The overall hold on the stock has proven to be successful so far and if there’s enough people who aren’t willing to sell, it could retain its value simply out of stubbornness.

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Source: The Street

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