GameStop’s Price Madness
GameStop’s stock price has risen dramatically due to what is known as a “Short Squeeze”. The reason why some investors were shorting the stock is because GameStop’s business is going the way of Blockbuster – why go to GameStop when I can download my games directly. This thesis is shown in revenue dropping 30% last quarter. Today the options market is demanding huge premiums to buy an option. This amount of heightened volatility is a sign of risk. Young investors buying the hype from sites like Reddit and Robinhood should be cautious when ‘jumping on the bandwagon”.