(New York) The American chain of video game stores GameStop saw its share skyrocket on Wall Street on Friday, presumably pushed by speculators.
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The title of GameStop climbed more than 51% to end at a record high of US $ 65.01. The company even saw its listing suspended several times during the session due to too much volatility.
Since the start of the year, the stock has risen nearly 250%, due to massive purchases by investors who previously bet down on the stock.
GameStop is indeed one of the Wall Street companies most targeted by short selling (short selling), a practice whereby an investor sells securities that he does not own at a generally high price, anticipating its fall and hoping to buy them back much cheaper at a later date.
According to some analysts, many investors may have been forced to buy the stock earlier than expected to limit the risk of loss, which led to the increase in the value of the stock.
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A threatened investor
The group, headquartered in a suburb of Dallas, Texas, has a network of approximately 5,000 stores in 10 countries, including the United States, Canada, Germany, and the United Kingdom.
As a side effect of GameStop’s push to Wall Street, investor Andrew Left, from Citron Research, has decided to no longer disseminate his analyzes on the company.
Mr Left, who posted a video on YouTube Thursday where he deemed the stock overpriced, received an avalanche of negative and sometimes threatening reactions. He called his detractors an “angry mob that owns the title.”
“It’s not just insults and hacks, but also serious crimes like the harassment of underage children,” he wrote on Twitter.
We are investors who put safety and family first and we believe that has been put at risk.
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Andrew Left, Citron Research investor
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“It is our duty to distance ourselves from this action,” added Mr. Left, who intends to take legal action on the threats he has received.
In his video, which was originally supposed to be broadcast live on Twitter, but was broadcast delayed due to hacks, the investor highlighted the company’s decline in revenues, its significant debt or the fact that the increase in the price of its stock was mainly due to its popularity among less experienced stock marketers.
Mr. Left also believed that GameStop’s sales model, which relies mainly on trading second-hand games, was “outdated” and that it was struggling to compete with current practices, whether downloading or of the game via remote computing (cloud).
Some of Mr. Left’s critics recalled that several years ago he predicted the downfall of electric vehicle maker Tesla, a company that has experienced one of the most meteoric climbs on Wall Street.
Citron Research has since revised its position and recommended buying or keeping Tesla stock.
Declining revenues
GameStop’s action had already swelled last week after news of the arrival on its board of directors of Ryan Cohen, former boss and co-founder of pet stores Chewy.
This news had attracted a significant number of small investors and speculators.
Despite these sharp stock market movements, the chain of stores is struggling to adapt to the new reality of the video game market, dominated by online sales and large retail giants such as Amazon, Best Buy, Target or Walmart.
GameStop’s revenue declined by 3% during the holiday season.
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