GameStop’s Meme Stock has another wild meme moment

Two Wall Street traders wearing Mario and Luigi hats stare in terror at another roller coaster ride.

Photo: Kotaku/Spencer Platt (Getty Images)

People were waiting for GameStop bubble pop for over a year now. Instead, the struggling brick-and-mortar video game retailer just posted another banner week on Wall Street. Earnings are down. employee morale is in the pits. But the company’s shares have fallen from $78 a share last month to more than $185 in early trading today, following big moves by its new tech overlord and news of its first tech split. actions in 15 years. Physical games are dying, but zombie GameStop continues thanks to the market Endless fondness for casino-style gambling.

So what exactly is going on? Here’s an explanation for the meme stock’s renewed fury: Last week GameStop Chairman of the Board Ryan Cohen bought 100,000 additional shares of the company’s capital. It was a move worth around $10 million and a signal to other investors — and Cohen’s rabid fanbase in the meme-stock community — that he had big plans and full confidence in the weakened retailer.

This week, GameStop also announced an upcoming stock split increase the total number of shares available from 300 million to 1 billion. This decision lowers the price of each individual stock while keeping the same value for all current investors. This is something companies often do to build short-term hype, but in GameStop’s case, it can also make it easier to get random posters on Reddit and elsewhere.

Another explanation for why GameStop’s stock is on fire again is that no one really knows what is going on, and everyone is just trying to catch the last wave before it all comes crashing down again. Stock trading is gambling. Historically, no one, no matter how smart, beats the market. But every lottery has a winner, and a lot of people think it could be them.

“GameStop as a company doesn’t do anything productive,” said University of Central Florida finance professor Kevin Mullally. said NPR yesterday. “But it’s like people are buying pet stones or Beanie Babies. These things are basically worthless. It’s weird and I don’t understand. But there are a lot of weird things people buy that I don’t understand.

A chart shows GameStop's volatility throughout the week.

Screenshot: Google/Kotaku

Throughout the GameStop meme stock saga, there has always been a dispute over the share of extremely online trolls versus large and medium-sized professional investors. But no one can deny the frenzy of GameStop boosters constantly getting into business advice watering holes like WallStreetBets and, more recently, r/GME. “Apparently 16%+ premarket isn’t good enough to report on Bloomberg», reads the current best position on the GameStop stock community, which remains defined as much by its collective performance of mainstream market resentment as anything else. “Today will be the first day in over a year that I haven’t watched the opening bell to fight!” read another. “I’m going to have surgery. God bless Gmerica.

Posters like these may not be legion enough to be responsible for GameStop’s massive stock swings, but the sheer identity driving their enthusiasm is far more compelling than the alternative, which is that “it doesn’t matter, none of it matters.”

The original 2020 case for GameStop was that the company still owned tons of real estate, the PS5 and Xbox Series X/S were about to launch, and the market was undervaluing it at just $5 apiece. action. What’s the case for GameStop now? There is none, at least not one who isn’t attached to the cult of personality around GameStop’s new man behind the curtain, Ryan Cohen, Founder of Chewy. Cohen’s fame was selling pet food online. More than a year later, no one has understood how that translates to a business where most games are now purchased digitally directly through Sony, Microsoft, and Nintendo’s online stores.

Even former Nintendo of America president Reggie Fils-Aimé didn’t get it and ended up getting thrown off the GameStop meme stock train shortly after he left the station because “there was no articulated strategy.” To the extent that a strategy exists, it so far seems to revolve around transforming GameStop into a “technology” company and launch of a new crypto platform. A good scam begets another.

As always, the people left out of Cohen’s Machiavellian market moves and Reddit’s meme stock management are the thousands of people working in the actual stores that generate the actual income. “How are we supposed to hire ‘the best talent’ and yet we pay less than White Castle for assistant managers,” reads the best post today on GameStop employee “the power of profits” Reddit. The one directly below simply reads “miserable”.

Despite golden parachutes for executives and unfathomable rallies on Wall Street, store workers regularly to say Kotaku they haven’t received a raise in years, despite record inflation and higher rates at the big box stores and supermarkets just down the street.

“You want my opinion on the stock? said a current deputy director. “All you’re doing when you buy their stock is allowing their treatment – and excuse my English – but rather shit on the employees. They see that they are still making money, they will always stay the same.

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