GameStop’s ‘maniacal’ rally: Will it continue?

Struggling video game retailer GameStop saw its stock gain nearly 1,000 percent in January, rocketing from a low of $18. The rally, described by Wall Street watchers as ‘maniacal’ was initially billed as a ‘David vs Goliath’ fight in which an army of faceless day traders managed to give a bloody nose to some powerful hedge funds, which had short sold the stock. Some market commentators saw this as an upending of the social order on Wall Street, and something which was likely to intensify in the days ahead.

The saga began with the announcement that Ryan Cohen, a co-founder of, an online pet store, had joined the video game’s board. According to the Associated Press, investors saw Cohen as someone who could push the digital transformation of GameStop, which has suffered massively due to the COVID-19 pandemic. But Cohen’s joining the board fueled the enthusiasm following which a group called “WallStreetBets” fought Wall Street funds that had pushed the GameStop stock lower.

The GameStop stock happened to be the most heavily “shorted” on Wall Street and the group noticed it. The discussion on the “WallStreetBets” group centred around the video game and they were seen pushing each other to continue buying GameStop, causing the rally. Melvin Capital, a well-established hedge fund, sustained massive losses on its bets that GameStop would fall, reported NDTV.

However, despite what’s been a monster rally, Wall Street analysts believe that GameStop’s stock isn’t sustainable in the long-term. They say the prices, which closed at $44.97 on February 23, could fall as low as $15 in the time to come. The current price of the video game retailer’s stock is already much, much lower than the highs it touched last month when it was at its peak.

The massive fluctuation in the GameStop stock continued even on Monday, Wall Street Journal reported. The prices gained 13 percent to $46, a change in fortune after a string of losses in over two weeks. During last month’s rally, the prices had rocketed as high as $483. However, the volatility in the prices is something the Wall Street analysts have repeatedly spoken of.

After having captivated the market, the stock began tumbling soon after. On February 2, for instance, just days after touching what was an unimaginable figure of $483, the price fell massively to $90. The 60 percent loss came only a day after the stock had taken a 30 percent hit, closing at $325 on February 1.

Comparing the peak, GameStop value with the closing stock on Tuesday revealed that prices have already fallen over 90 percent, weeks after the story captured everyone’s imagination and sent the big Wall Street investors packing.

Not just that, the regulators in the United States are now looking into the possibilities of “market manipulation” or any other “criminal misconduct” that might have caused the massive rally in the struggling video game’s stock.

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