Shares of GameStop, everyone's favorite video game retailer, were up nearly 100% this week after cratering at $77.58/share on a surprising EPS miss from their Q4 2021 earnings results. GameStop's stock did the unthinkable this week by actually rising in the face of plenty of headwinds.
I put my money where my mouth is— Ryan Cohen (@ryancohen) March 22, 2022
While the stock was already bouncing from oversold levels, GameStop's Chairman of the Board Ryan Cohen poured some gasoline on the fire when he disclosed that his investment company RC Ventures bought an additional 100,000 GME shares earlier this week.
Over 65 million GME shares traded this week, with 24 million GameStop shares changing hands on March 23, 2022 alone. Several reports of short borrowing rate increases were spreading across Reddit and Twitter earlier in the week, and I can confirm that my broker Etrade's estimated borrow rate for GME shares has increased from 2% to 5% in the past week. This means that short positions in GameStop are going to be more costly to maintain, and this pressure will likely continue as the Federal Reserve continues their increasing rate monetary policy cycle.
The March 25, 2022 GME $150 call option traded over 30,000 contracts today and did close in-the-money, meaning this wild ride for GameStop shareholders might keep going when the market reopens on Monday. Shares of GameStop are up 96% from the lows set on the day after the Q4 2021 earnings results disappointed Wall Street analysts with a surprised loss.
Can't stop, won't stop, GameStop.
This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.
At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, or his company Virtue LLC had the following positions:
Long GameStop via GME shares (partially-hedged with out-of-the-money put options)
Long GameStop via GME call options
Asif Khan posted a new article, GameStop (GME) stock jumps nearly 100% in one week from the post-earnings low
That’s what happens when you kick the can on obligations for 4+ months. Welcome to institutions squeezing the crap out of your shorts. Gamma squeeze primed for next week (dependent on exercising from all those ITM calls).