GameStop’s stock has steadily been climbing all month long, but earlier today, it reached its highest point in company history. This continuing trend has been a shock, to say the least, but it now sounds like we have a better idea of why things keep moving in this direction.
Around midday today, GameStop‘s stock price topped out at $76.76 per share. This value was an 80% increase compared to where it began at the start of the day when it was coming in at just about $42. Since that time, the stock has fallen back down a bit. As of this writing, the current stock price sits at $65.01, which is still good for a single day increase of just over 51%.
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So why is this happening? Well, it seems like many are looking to create a short squeeze on GameStop. In simplest terms, shorting is where an investor borrows shares and then right away sells them. People do this when they expect a stock to then fall in price. If this happens, the investor then buys the stocks back at a smaller price compared to what they bought them for and returns those shares to the one that lent them in the first place. As a result, they’re then able to pocket the money that they made as a result. It’s an incredibly risky thing to attempt, but it can result in money made in a very short period of time if done effectively.
Essentially, a large enough group on the Internet, many of which stem from Reddit, has looked to create a short squeeze on GameStop that it has resulted in this drastic increase in stock price. In fact, so many people have been buying and selling GameStop’s stock today that the market has frozen all trading related to the company a handful of times. As a whole, GameStop was the most-traded company on the stock market today.
This whole saga over the course of the past few weeks has been fascinating to see unfold, but it seems like only a matter of time until GameStop’s stock price levels out a bit. Even prior to this squeeze attempt, however, the company had seen its share value go up after a noteworthy investor joined the board of directors. Where the stock price will begin to even out remains to be seen, but in all likelihood, it should continue to be volatile for a bit longer.
[H/T GamesIndustry.biz]