GameStop, the stock that witnessed the might of retail traders pulling down institutional investors has made the headlines again. The company reported a net income of $48.2 million after the company had reported net losses in successive quarters. The shares of the company soared by 50% in the after-hours of Tuesday’s trading.
Short sellers of GameStop are witnessing the ‘Déjà Vu’ moment as prices of GameStop are rising. If the stock continues this trajectory of meteoric rise, short sellers could be squeezed out of their positions. GameStop CEO, Matt Furlong said in August last year said that the company would focus on achieving profitability, launching proprietary products, and investing in new stores as the company had spent a year strengthening its infrastructure and technological capabilities.
In recent years, GameStop has become a high-profile company due to its involvement in a major short squeeze by retail investors on the stock market in early 2021. This was driven by the subreddit group "r/wallstreetbets," which encouraged its members to buy shares of GameStop and hold onto them, to drive up the stock price and squeeze out short-sellers. The short squeeze caused GameStop's stock price to soar from around $20 per share to a high of over $400 per share within a matter of weeks, before eventually settling back down to more modest levels.
While the company has been in the limelight for the battle between short-sellers and Reddit traders, the company has a lot of catching up to do in terms of adapting to the e-commerce and digital economy.
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