Ben Gilbert / Business Insider
- GameStop gained up to 6% in early Friday trading as retail investors put more money into high-risk stocks.
- Citron Research partner Andrew Left outlined five reasons why the stock dropped to $ 20 on Thursday, but his video only encouraged online traders to increase their bets.
- Purchases by casual investors more than doubled GameStop’s shares this month. Even so, technical indicators suggest that the rise is losing strength.
- Watch the GameStop trade live here.
GameStop jumped up to 6% at the start of Friday’s trading, with investors looking to stop short sellers by investing even more in stocks.
The video game retailer’s shares more than doubled in January, after changes to the company’s board of directors sparked an explosive rise. The bullishness intensified as short sellers abandoned their bearish positions and a growing crowd of retail traders applauded the bullish move.
The fight between shorts and bulls entered a new stage on Wednesday after Citron Research managing partner Andrew Left posted a video highlighting five reasons why he expects GameStop’s stock to drop to $ 20. initially planned to broadcast explaining his short position, but attempts to hack his Twitter account forced him to record the video.
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The managing partner criticized GameStop’s high rating and reliance on physical locations in the nearly 7-minute video. Left also called on traders to double their shares, urging them to “know who’s on the other side of the business” and respect their experience in the market.
“This is a bankrupt mall-based retailer,” he added. “The number of people who are so passionate about elevating GameStop, not because of any fundamentals, just shows the natural state of the market.”
Members of the WallStreetBets subreddit are not bothered. The forum – known for its raw market-based humor and the celebration of three-digit swings in the portfolio – remains very optimistic about the stock and features several posts scolding the left for its bearish position. Commentators ask each other to keep “diamond hands” and maintain their GameStop actions indefinitely. Others call on retail merchants to join them and raise inventory even further.
While it remains unclear who will win in the end, some indicators suggest that the bullfighting party is coming to an end. The Relative Strength Index for GameStop’s shares – a measure of the stock’s momentum – is just below 80, after rising 10% on Thursday. Readings above 70 suggest that the stock is overbought, and the index has not fallen below the threshold since January 12.
GameStop closed at $ 43.03 on Thursday, up approximately 123% year-to-date. The company has two “buy” ratings, two “wait” ratings and one “sell” rating from analysts.
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