Investors who have owned shares since 2016 have generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE: SPY) the total return in the last five years is 110.5%. But there is no doubt that some big-name stocks performed better than others along the way.
GameStop Rises: One action that has apparently risen to become one of the best investments in the past five years is the video game retailer GameStop Corp. (NYSE: GME).
Like other brick and mortar retailers, GameStop’s business was in vital support even before the 2020 pandemic. From early 2016 to 2020, the company’s 12-month accumulated revenue fell 21.6%. In 2018, GameStop reported a 3% drop in revenue and a net loss of $ 673 million. In the most recent quarter, GameStop’s revenue plunged 30.1% in a net loss of $ 18.8 million.
In early 2016, GameStop’s shares traded at around $ 27. In the next three years, shares fell steadily as more video game sales changed online.
Settlement increased in 2019 and GameStop finally hit the $ 3.15 low threshold in early fall 2019.
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GameStop in 2021, in addition: GameStop recovered to as much as $ 6.92 in late 2019, before the liquidation of the COVID-19 pandemic, which pushed shares back to $ 2.57 in March. Fortunately for GameStop investors, the shares had a major catalyst in August 2020, when Chewy Inc (NYSE: CHWY) founder Ryan Cohen acquired a 9% stake in GameStop.
At the end of 2020, GameStop’s stock was over $ 10, drawing the attention of the Reddit WallStreetBets trading community. WallStreetBets recognized the opportunity created by GameStop’s great short interest, and they used a range pressure from the options market to trigger institutional investor short pressure to send GameStop shares “to the moon”, or at least up to $ 483 .
GameStop investors who bought and held their lottery tickets over a historically volatile five-year period made a significant profit. In fact, $ 1,000 in GameStop shares purchased in 2016 would be worth about $ 16,100 today, assuming reinvested dividends.
Looking ahead, analysts expect GameStop’s journey to the moon to be a one-way expedition. The average target price among the nine analysts covering the shares is $ 12.50, suggesting a 94.9% drop from current levels.
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