By Steven Park
GameStop Corp shares more than doubled on Wednesday, February 24th. This sudden surge surprised many that believed the company’s stock prices would stabilize following the first spike on Wall Street earlier this year.
During this spike, GameStop shares were up 60% after hours (around $146), followed by a 103% rise during the day’s trading. The day of this surge, there was a rally that took place around 2:30 pm EST that halted trading in GME (GameStop Corp.) multiple times. Analysts attempted to uncover one specific reason for this rally but were unable to. Despite this rally, GME reached an all-time high on January 27th.
Joseph Feldman, an analyst at Telsey Advisory Group said, “GameStop announced the resignation of its CFO last night. Some may have taken this as a good sign that RC Ventures is making a difference at the company in terms of trying to accelerate the shift to digital.” This also surprised posters on Reddit with some commenting, “Why is GME going back up? Is it Melvin covering?!”
Earlier this year in January, GME shares soared upwards of 1,600% as shares were purchased by investors in an attempt to punish hedge funds such as Melvin Capital. Put simply, hedge funds is a “limited partnership of investors that uses high risk methods, such as investing with borrowed money, in hopes of realizing large capital gains” (Oxford Dictionary). Consequently, this resulted in Melvin Capital losing 53% before making the decision to close its position in GameStop. A similar spike took place on February 24th in which companies such as Entertainment Holdings Inc, Tilray Inc, and BlackBerry Corp experienced gains running from 9%-18%. Although there are varying opinions on whether or not this will happen again with GME, there is no certainty that another spike will occur anytime soon.