Gamestop is a retailer of new and pre-owned video gaming consoles, accessories and video game titles, in both physical and digital formats. The company is on the Fortune 500 companies list and is headquartered in Grapevine, Texas. Recently you might have heard about the stock price having a roller coaster ride. The company's stock was $17.37 as January started then it reached $347.51 near the end of January again coming down around $50 in February and as of yesterday, it was trading at $101.74.

It is an interesting story involving big Wall Street hedge funds and an army of retail traders wanting to stick it to the big guys.

Gamestop's floating shares were 138% shorted making it the most shorted stock in the US stock market(currently at 41.22%). Many Hedge Funds were betting on GameStop going bankrupt because of the rise in online purchases of games and the business severely hit by lockdowns as all the retail outlets were affected. However recently the company has diversified and is expanding in the e-commerce segment. The company saw an increase in digital sales of 309% during the holiday session last year. Also in mid of 2020, Ryan Cohen founder of Chewy who sold his company to PetSmart for $3.35 billion brought a 10% stack in Gamestop and is currently on the Board of Directors. 

Enter the retail traders who had an optimistic approach towards the stock because of good fundamentals, recent changes in the board of directors and some childhood nostalgia started buying GME stocks. This created a massive Short Squeeze as the funds tried to cover their positions due to an increase in price which further increased the price. The retail traders believe that the sharp share price rise at the end of January was just the first wave, there may be many more short squeezes as the Hedge Funds are still holding short positions.

So before you go out and start buying GameStop shares I would like to warn you that investing is a risky business if you do not have proper knowledge about various factors affecting the stock price of the company, kindly refrain from doing so because you are filling a serious case of FOMO. Because this share has made millions for some and it has also bankrupted many. Therefore trade accordingly.

What do you think about this unique scenario? 

Have you invested in this stock? Are you planning to?

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