Ines Ferre of Yahoo Finance joined Yahoo Finance to discuss the recent rise of GameStop and the reason behind it.
Video transcription
SEANA SMITH: But we want to get to a big engine today, which is GameStop. We had a stock jump – the stock was interrupted in the previous trades after the hike – you see – more than 140%. He came back a little, but we want to reach Ines Ferre, who is following this for us. And Ines, a lot of talk about the retail investor, how exactly that is influencing all of that. But earnings as we saw on GameStop, especially earlier this morning, is certainly something you don’t see very often.
INES FERRE: Well, this is unbelievable what we saw with this stock. I mean, you had a day high of $ 159 and a low of $ 61. As you mentioned, it went up more than 140%. Then, he briefly returned to the red territory before returning to the green. And that stock in July last year was trading around $ 4.
And what we saw with this movement is so much volatility in the last week, but also before, because you had shares that fluctuated around $ 20 around January 12th. And it’s just been a wild ride for the past few weeks.
Now, Telsey’s consultants have withdrawn their only top performance rating from the stock, making a double downgrade to underperforming, purely based on the valuation with a target price of $ 33. has a target price of $ 3.50 cents for that action. So now, this stock has four holds and four sales.
We talked to some analysts. We talked to Anthony Chukumba, from Louis Capital. He said, look, if you want to play, go to the casinos. He’s talking, of course, about retail investors and what’s going on, that clash we saw with Reddit users, Wall Street bets with short sellers.
I mean, what you’re seeing in stocks is a massive drop in short sellers. And he said in his 20s on Wall Street, he had never seen anything like this before. We also contacted …
ADAM SHAPIRO: Hey, Ines?
INES FERRE: Yes.
ADAM SHAPIRO: Let’s talk about this. The uncovered interest in this action was enormous. And there has been pressure, however – it’s almost as if we are seeing the flip side of it. How serious is that, maybe someone manipulating? And in the end, someone always gets hurt.
INES FERRE: Yes. I mean, this is not necessarily something that is happening – there are people out there predicting, of course, that it would end badly. So S3, the data company that analyzes short sales, spoke to us this morning. They basically said they saw what is called massive short squeeze by older shorts. But then you have some of the new ones that are emerging in the hope of this setback. That’s why you saw that big increase of over 140% earlier this morning.
Also, they gave this great quote, basically saying, much like in the Revolutionary War, the first line of troops falls in a rain of musket fire, but is replaced by the following troops. So you have shorts, but then you have other shorts right behind them.
Now, Brian Shannon, I know, talked to Jared Blikre last Friday about these sellers and basically alerting – he’s a veteran trader – and basically alerting, wait until the stock starts breaking down before you get into that, because of course log in. So, they have to cover. Then, the stock goes up. But he is saying, wait, because you want to wait until he breaks.
SEANA SMITH: All right. Ines Ferre. Thank you very much for bringing us the latest news on GameStop. Again, stocks still rose significantly, but well below their day highs.