Following the announcement that its chief financial officer will step down next month, GameStop’s stock is once again on the rise. The surge arrives a month after a group of investors from Reddit drove GameStop’s stock to record-breaking heights.
GameStop’s stock jumped to $91.71 by the time the Stock Exchange closed for trading on February 24, a 104% increase over the previous day. The shares climbed so rapidly that it was halted twice for market volatility. The sudden jump in stock price comes a month after a group of investors from r/WallStreetBets began to buy up GameStop shares en masse, sending the company’s stock price soaring to more than $400 per share. The record-breaking surge in GameStop’s stock and its eventual collapse drew the attention of the national media and congress.
The February 24 jump in stock price comes the day after GameStop announced that its CFO Jim Bell would resign on March 26. In the announcement, the company stated that Bell’s resignation was not because of any “disagreement with the Company on any matter relating to the Company’s operations, policies or practices, including accounting principles and practices.” But outlets such as Business Insider and Bloomberg have reported that Bell was pushed out by Ryan Cohen, the co-founder of online pet supply retailer Chewy who was appointed to GameStop’s Board of Directors in early January.
Cohen purchased a large stake in GameStop last summer through his venture capital firm RC Ventures, and has since pushed the company to embrace the online marketplace over its brick-and-motor stores. In November 2020, Cohen sent a scathing letter to GameStop’s board in which he demanded that GameStop close several of its stores and instead focus on becoming a “technology company” that offers digital services and products. GameStop entered a deal with RC Ventures in January that appointed Cohen to its Board of Directors.
Some stock market analysis’s believe that Cohen’s appointment to GameStop’s board was one reason why the company’s stock surged to record-breaking heights in late January. A group of day-traders on r/WallStreetBets initiated the surge when they began buying up GameStop’s stock, which resulted in a short squeeze that cost the hedge funds that were shorting the company billions of dollars. The GameStop’s stock crashed at the beginning of February, and has not recovered until the recent jump. The frenzy drew the attention of Congress, which is currently holding hearings to investigate why it happened.
Investors from r/WallStreetBets who held on to their stock celebrated the recent jump in GameStop’s shares. The Reddit site temporarily shut down during the surge, likely because of high traffic.
Source: Bloomberg
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