The rise of shares of GameStop Corporation was one of the biggest storylines of the financial markets in 2021. The story lives on, with GameStop shares rising on a surprise profit and many retail traders pushing for changes related to the stock.
An epic David vs. Goliath battle between retail traders and hedge funds took place centered around GameStop stock in 2021.
GameStop shares soared, with retail investors recognizing the stock was not trading on fundamentals and many hedge funds shorting the stock, believing a bankruptcy was near.
On Tuesday, GameStop reported fourth-quarter net sales of $2.22 billion, beating a Street estimate of $2.18 billion. The company also posted a profit of 16 cents per share in the quarter, beating a Street estimate of a loss of 13 cents per share.
The storyline of the GameStop short squeeze and the rise in shares after reporting fourth-quarter earnings were among the topics covered on Wednesday’s “PreMarket Prep” show with guest Dave Lauer, the CEO of Urvin AI.
“I just love to see it. The ‘Apes’ go to GameStop they buy the stock, they buy the goods, they do everything,” Lauer said.
Show co-host Dennis Dick said GameStop posted its first profitable quarter in years, adding the rise in shares after earnings could continue to show that it’s not about the stock, but more about the movement.
“I would have never thought that retail could come together as a team to basically save” GameStop and AMC Entertainment Holdings, Dick said.
The retail traders helped get the short squeezes going, he said.
“If you like it or don’t like it, you’ve got to be impressed.”
Lauer spoke of the power of community in helping the GameStop movement.
“I think it’s amazing, I think it’s a testament to technology, to these communities that are self-organized,” Lauer said.
Individual investors came together and thought the stock wasn’t trading on its fundamentals and also learned the characteristics of short interest and what it meant, he said.
The GameStop short squeeze has taught many individual investors about the stock market and the potential problems surrounding it, Lauer said.
“They’ve learned so much about the market.”
While investors have learned positives, they have also learned about how individual orders are monetized and how some orders never hit the public view, he said.
Lauer said there are clear problems for the market and for price discovery.
“They found these loopholes, they learned about markets, and they’ve decided markets should work differently, and frankly it looks like the SEC agrees.”
Lauer said he is an advocate for fair markets and is a believer in the “WeTheInvestor” movement.
Today, GameStop CEO Matt Furlong stated the company planned to cut excess costs as in an investor call, according to CNBC.
“GameStop is a much healthier business today than it was at the start of 2021,” Furlong said.
The company was looking to revamp its real estate portfolio and increase its ecommerce presence as the video game industry is heading towards that direction.
Produced in association with Benzinga