The biggest name in the stock market right now is GameStop (NYSE: GME). Chances are, you’ve probably already heard about it by now. No matter what happens, shares are continuing to skyrocket as traders continue to pile on, with many Wall Street analysts now calling this stock a bubble that’s going to pop. While some had figured that GameStop had run out of steam back on Monday, shares almost doubled – once again – after Elon Musk made a short tweet about the company.
Last week, famous short-seller Citron Research said that it wouldn’t be issuing any more research on GameStop – which had been negative up until this point – due to the rapid reactions of traders who were getting emotional over the company. In response, shares skyrocketed on this apparent victory for GameStop bulls. Now, GameStop is continuing to rise following a single, one-word tweet from Tesla founder Elon Musk, which just read “Gamestronk!”
Musk’s tweet also included a link to the online Reddit community wallstreetbets, which was the main instigator of this surge in the first place, as retail traders first reacted against the bearish comments from Citron Research.
It’s actually kind of a surprising move from Elon Musk, especially since he’s gotten in trouble in the past for his own Twitter comments. Previously, Tesla’s CEO had faced potential legal issues with the SEC for tweeting about the company’s stock, having to pay a $20 million personal fine to the court in order to settle the issue. Since then, Musk has agreed to submit his public Twitter comments to legal scrutiny before he makes them.
Shares of GameStop were up around 91% on Tuesday following Musk’s tweet, with the company’s stock up a staggering 650% over the past couple of months. While the company is now trading at a sky-high valuation, long-term analysts on Wall Street are still quite skeptical about GameStop. Retail store sales have continued to struggle amidst COVID-19, with GameStop being no exception. While the ongoing restructuring of the company to a more online-focused model seems to be promising, when looking at the fundamentals, GameStop still remains a questionable pick from a long-term perspective.
As for how long the stock will continue to climb like this, it’s anyone’s guess at this point. Every time you think the stock has reached its ceiling, it finds a way to break past that and shoot even higher. From a historical perspective, these types of jumps tend to be followed by a reversal or correction. However, this case with GameStop is far from typical.
GameStop Company Profile
GameStop Corp is a U.S. multichannel video game, consumer electronics, and services retailer. The company operates across Europe, Canada, Australia, and the United States. GameStop sells new and second-hand video game hardware, physical and digital video game software, and video game accessories, mainly through GameStop, EB Games, and Micromania stores and international e-commerce sites, including www.gamestop.com, www.ebgames.com.au, and www.micromania.fr. The company has two main business segments: Video game brands and Technology brands. The technology brands segment sells wireless products and services and operates Spring Mobile managed AT&T and Cricket Wireless branded stores, along with the Simply Mac business. – Warrior Trading News