Why GameStop Stock Is Rising Today

What happened

Shares of GameStop (GME 14.36%) were running 2.8% higher at 11:16 a.m. ET on Tuesday despite (or perhaps because of) a Reuters article claiming retail investors were suffering from fatigue.

After more than a year of propping up the stock of the video game retailer when short-sellers piled into GameStop in hopes of driving it down to zero, the news outlet suggests the shorts are sensing small investors are tired of waiting for the mother of all short squeezes to materialize. Thus emboldened, the shorts have piled back into the stock, increasing the number of shares sold short by almost 12% in the latest period, or some 1.8 million shares.

Image source: Getty Images.

So what

HODL (or hold on for dear life) has become the rallying cry for many of the small investors who rallied around GameStop and other meme stocks that were also heavily shorted. While they claim the game is rigged against them and that the Securities and Exchange Commission is allowing illegal or improper activities, many continue to buy into the camaraderie that has developed in internet chat rooms. They routinely encourage one another to stay the course, believing the massive short squeeze is coming.

The thing about meme stocks is they tend to trade more on how much chatter they generate on social media and not on whether the underlying businesses are sound. GameStop is in the early stages of a multiyear turnaround, but management has been loath to reveal how it plans to make money in the future.

Now what

Reuters says a general market malaise and a Federal Reserve intent on raising interest rates to cool overheated inflation are causing traders to get antsy. Perhaps, but as Reuters also noted, retail investors dumped $2.8 billion into the market two weeks ago when there were sharp declines in stock values, and it’s possible a similar event with GameStop could rally them once more.

This news is republished from another source. You can check the original article here

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