Why Shares of GameStop Are Surging Today – The Motley Fool

0
184

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Motley Fool Issues Rare “All In” Buy Alert
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More
Shares of the video game retailer GameStop (GME 29.19%) had popped nearly 26% as of 1:37 p.m. ET today as excitement over a potential short squeeze rose on social media.
GameStop is the pioneer of the meme-stock movement that took 2021 by storm, so the stock is heavily susceptible to big random moves up and down. 
Today, it looks like interest in the stock on social media is building, as short interest has risen to the highest it’s been in more than a year, according to analytics company Ortex. The number of shares being shorted on GameStop is about 26.4% of the free float. The rising short interest has also significantly increased the cost to borrow shares, which is typically done in the practice of short-selling. Short interest can lead to a short squeeze, which has propelled several big GameStop moves in the past.
Image source: Getty Images.
GameStop earlier this week also announced the launch of its digital wallet for holding non-fungible tokens (NFTs) and cryptocurrency, as part of its plan to transform into a much more digitally driven company.
The stock hasn’t moved higher this week until today, so perhaps the new wallet offering is catching investor interest, although it’s likely more related to the buzz about short interest and the cost to borrow shares. The volume of shares being traded had risen to 5.26 million as of this writing, with recent volume averaging about 3.8 million shares.
GameStop is likely moving higher as meme-stock and retail investors look for a big squeeze in what has been a depressed market.
When things get like this, there can be intense volatility, so I would recommend watching the show from the sidelines. However, if you can’t resist getting in on the action, only invest what you are willing to lose, because you could very well lose it all.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Market-beating stocks from our award-winning service.
Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/25/2022.
Discounted offers are only available to new members. Stock Advisor list price is $199 per year.
Calculated by Time-Weighted Return since 2002. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
Making the world smarter, happier, and richer.

Market data powered by Xignite.

source