3 Lessons From GameStop's Meteoric Rise
It's still early in 2021, but there's a good candidate for stock story of the year.
Shares of GameStop (NYSE: GME), a stodgy video game retailer, have soared recently thanks to a band of traders on the Reddit group WallStreetBets. Though there's been no significant news out on the company this year, these traders have executed a massive short squeeze on a stock with a low float that was heavily bet against. As of the end of December, 260% of GameStop's float been sold short, meaning the average share had been borrowed 2.6 times. The overwhelming majority of investors were betting on the stock to go down, but the skyrocketing share price forced many of those traders to buy back the stock, helping to propel the rally.
GameStop stock has essentially doubled in each of the last two weeks and was off to a blistering start on Jan. 25 as well, pushing the share price as high as $159 before it pulled back. The ascent continued on Wednesday morning, as shares jumped to $250 in pre-market trading. Over the last six months, GameStop shares are now worth more than 50 times what they were as recently as August, when they were trading below $5 -- penny-stock range. While there's no telling how or when the stratospheric rally will end, there are some important lessons for investors to take away.
Source Fool.com
