Historic Week for GameStop Ends With 400% Rally as Shorts Yield
(Bloomberg) — In its 19-year history on the U.S. stock market, GameStop Corp. has never experienced a journey like this — record volatility, multiple trading halts and an $18 billion boom in market value.
The video-game retailer soared 400% this week even as brokerages including Robinhood Markets clamped down on retail trades that burned short sellers and hedge funds. Its shares have gained 1,625% so far this year, and at one point it briefly took the No. 1 spot on the Russell 2000 Index from Plug Power Inc.
The stock’s surge from $65 to a Thursday peak of $483 was a wild ride for some as Reddit-armed retail investors cheered its ascent, while short sellers capitulated and closed their positions.
“It’s a little bit like a roller coaster. You don’t go on a roller coaster because you end up in a different place, you go on it for the ride and it’s exciting because you’re a part of it,” said Dan Egan, managing director of behavioral finance and investing for robo-adviser Betterment LLC. “I think a lot of people who trade this don’t have a clear exit strategy or exit criteria.”
Here’s a look at GameStop’s wild ride this week:
Grapevine, Texas-based GameStop triggered nearly 40 volatility halts this week — including a company record of at least 19 on Thursday when brokerages moved to curb trading of the stock on their apps.
Measured a different way, GameStop’s manic month was the most volatile for the company on record. When looking at historical measures from 10-day volatility to 100-day volatility, things have never been this choppy for the stock since it went public in 2002, data compiled by Bloomberg show.
GameStop’s rise has come amid a rush in volume, with the company among the most actively traded U.S. stocks throughout the week. More than 110 million shares changed hands on average with Monday and Tuesday featuring the second and third most active days in the company’s history.
The retailer closed Friday’s session with a market value of $22.7 billion, up from less than $5 billion one week ago. GameStop’s rally vaulted it past cruiseliners Carnival Corp. and Royal Caribbean Cruises Ltd. as well as packaged food provider Kellogg Co.
At one point, the company briefly became the largest member of the Russell 2000 Index, overtaking Plug Power, a hydrogen fuel-cell maker.
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