It’s a bit of a battle of attrition. News sources are continuing to say that the Gamestop surge is over. Redditors, however, say otherwise.
Exactly one week ago, we reported on how the Gamestop value dropped from it’s major highs. At the time, media reports were suggesting that the Gamestop surge is pretty much over. At the same time, though, Redditors on WallStreetBets were urging each other to hold the line.
Today, we decided to check in on everyone involved. First, we wanted to offer what the Gamestop value closed at today. At the moment, Gamestop is trading at 50.31 per share. Obviously, that is a far cry from 347.51 per share – the peak high for the stock value over the last month. On the surface, that sounds like the party well and truly is over. However, the peak and the current value doesn’t really tell the whole story. For instance, on January 11, the stock value was 19.94 per share. That was before Redditors started buying up the stocks in the first place. Suddenly, 50.31 per share doesn’t exactly sound like rock bottom any more.
So, what are people saying about Gamestop today? The Motley Fool is arguing today that investors still holding on have lost their shirt. From their article:
Speculative: the word is often used to describe the crypto market. Still, after what happened with Gamestop (NYSE:GME) rally, it might be safe to say the speculations — especially once they gain traction in the social networking circles and build up a legit “hype” — can be just as potent at driving the price of stocks up and down as they are at controlling the price of crypto.
Whether or not you participated in the rally, made a profit, or lost a lot of money, there are a few lessons to learn from the rally and the perils of jumping on a perilous, short-lived bandwagon.
From the beginning of this year to the recent peak on Jan. 27, Gamestop stock grew by over 1,900%. That’s more than how much Bitcoin grew from its lowest point after the 2017 crash to its 2020 peak.
And while it was glorious for people who bought and sold at just the right moment, it caused many average investors to lose their shirts to this bet. According to an analyst, that’s what usually happens when a short squeeze meets its inevitable end. For an average investor, betting against the machine (or, more precisely, betting “late” against the machine and not pulling out on time) didn’t go very well.
A small minority won the short squeeze, and even though it was a different minority compared to the elites, the situation only got worse for the average investors.
Other sources are continuing to say that the party is over as well. CTV is one such source:
GameStop, the struggling video game retailer at the center of a Wall Street frenzy last month, is losing stream.
The stock was down nearly 20 per cent to $48.79 a share on Thursday, a sign that the party was winding down for retail investors who drove GameStop to record highs last month. Last week, the stock tumbled more than 80 per cent.
While it sounds conclusive on the surface, there’s one problem with these lines of thinking on what is happening with Gamestop: the same thing was being said exactly a week ago. During our report that day, we quoted another news article saying it was all over. In part, it said the following:
“The short squeeze momentum met its inevitable end,” said Mark Taylor, a sales trader at Mirabaud Securities. “It seems reasonably clear that as the cheerleading and rage against the machine dies down, the man on the street is left holding the bag again.”
So, the question is, when was it all over? Then or now? For something that is supposed to be over last week, it sure is taking a long time to be over. If it was all over, why isn’t the value of the stock hovering around 20 per share like before? Right now, it’s value is more than twice that baseline.
Well, a quick look over at WallStreetBets suggests that people are still holding onto their GameStop shares. One post comments:
I own 200+ GME@199. Some shills and boomers like to come in here and call me and my fellow apes retards. Guess what? I bought a bunch of TSLA way back when the same guys said it was retarded. My TSLA stock has since increased with 1700% in value. I thought I’d take some of those profits and join the GME fun, because I like the stock, and I like apes. I will still be thousands of percent plus if GME would hit 0. I don’t believe it will, because something historical is happening and it’s a privilege to be part of it. All you haters will see down the line. Just like you have done with TSLA.
In another post, one user said that they are not bag holders, but game company owners. From their comments:
Many of us here are GME owners now, whether we currently like it or not. But, as owners, you have the potential to vote on company decisions.
The Venn diagram of GME holders and gamers in this subreddit is probably pretty close to being one circle. If we pooled all of our ideas for the company into threads, collectively voted the least retarded ones to the top, and proposed them to management, we could potentially grow the intrinsic value of GameStop ourselves.
At this stage, the players who are left in this fight are fighting a battle of attrition. It really doesn’t look like either side is backing down. This after all the significant interest has moved on to other topics of interest. Still, to say this battle is completely over is an extremely tough sell at this stage. If the value drops below 20 per share, then a pretty good argument could be made that it’s definitely over. While it’s still two and a half times the value it was before the rush? Maybe not so much.
Drew Wilson on Twitter: @icecube85 and Facebook.
