Key Points
A spike in GME stock prompted a LULD pause on Monday, May 13, 2024.
The spike is due to a social media post by “Roaring Kitty,” the social media poster who sparked the company’s meme stock rally in 2021, fueling speculation that another short squeeze is imminent.
The fundamentals are still weak; speculators should proceed at their own risk.
5 stocks we like better than GameStop
GameStop Corp. NYSE: GME shareholders may have a feeling of deja vu. Trading of GME stock was paused due to a limit up limit down (LULD) pause on Monday, May 13. The 110% higher move fuels the idea that GameStop is ready to experience another short squeeze reminiscent of 2021.
But the GameStop stock price spike isn’t fueled by news that impacts the business. The company doesn’t report its first quarter earnings until June 5, 2024. The “news” is that Keith Gill (aka Roaring Kitty) took to X this weekend for the first time in nearly three years. Get GameStop alerts:Sign Up
It was Gill who helped make GameStop one of the original meme stocks in 2021. The idea was to target short sellers, specifically Melvin Capital and force them to cover their short positions. This would drive up the price of the target stocks, creating a short squeeze.
Well, guess what? Short interest in GME stock is over 21% of the float. That’s drawing the attention of the meme stock crowd, who may be trying to catch lightning in a bottle again.
There’s Still No “There” There
$49.25 +18.80 (+61.74%) (As of 05/14/2024 ET)52-Week Range$9.95▼$64.83P/E Ratio2,463.73Price Target$5.60There are two stories surrounding GameStop. One is coming from a determined group of traders who are intent on “sticking it to the hedge funds” that are shorting GME stock.
The other story is from those hedge funds and analysts who correctly note that the underlying fundamentals of GameStop remain underwhelming. In the company’s most recent quarter, the company missed on both the top and bottom lines.
At that time, the company reported an unspecified number of layoffs as it continues to face competition in its e-commerce business. The bottom line is that GameStop’s legacy business is irrelevant to the needs of today’s gaming community. In fact, the company’s business model now focuses on allowing its chief executive officer (CEO) and chairman, Ryan Cohen, to buy and sell cryptocurrencies and other blockchain-related stocks.
Chase GME Stock at Your Own Risk
The GameStop analyst ratings on MarketBeat show that only Wedbush has weighed in on GME stock, and their Strong Sell rating should not inspire confidence. Remember that analysts rarely issue a Sell rating, let alone a Strong Sell rating.
It would be foolish to predict what will happen next with GME stock. All the fuel is there for another short squeeze. But before you get involved, remember that a short squeeze is the definition of the “greater fool theory.” That is, the price will keep going up as long as you can find one more buyer who’s willing to pay a higher price than you.
If you’re going to take a spin on this roulette wheel, you need to understand that this surge is being fueled by fantasy, not fundamentals. That doesn’t mean you can’t make real money. But you need to have an exit plan in place and take your profits when you get them. Before you consider GameStop, you’ll want to hear this.MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and GameStop wasn’t on the list.While GameStop currently has a “Sell” rating among analysts, top-rated analysts believe these five stocks are better buys.View The Five Stocks Here Click the link below and we’ll send you MarketBeat’s guide to investing in electric vehicle technologies (EV) and which EV stocks show the most promise. Get This Free Report
