Trading shares in retailer, GameStop, has looked felt like...well...a video game. Shares of the major video game retailer have gone parabolic in what appears to be a perfect storm of small investor interest, short covering from major institutions, and enthusiasm driven on a Reddit chat forum. Approximately 175.5 million shares of GameStop traded hands on Monday, the second highest one-day total ever. You can't make this stuff up.
Entering the year, GameStop was one of the most shorted stocks in the marketplace, which perhaps set it up for even more speculative bets and trading on where shares would go. Small investors, urged along on Reddit and other chat forums, piled into GameStop, sending shares surging well over 100% on Monday morning, before giving it all back and surging higher before close. Truly insane. Trading was halted nine different times by the NYSE.
For the year, GameStop is still up huge, which has led money managers to unwind short bets and purchase shares to cover - driving upside even further.
Bottom line, in my view: steer clear of trying to get involved with predictions about where GameStop could head next. The story itself has drawn too much attention into the stock, pulling it far out-of-line with the company's actual fundamentals, in my view. I think it's ripe for some kind of reckoning that will cost many investors dearly.
Below, Tickeron's A.I.dvisor delivers insight on the gaming industry, which the A.I. thinks has a positive outlook.