Despite the prevailing negative sentiment towards GameStop (NYSE: GME) stock in the short term, it continues to attract widespread attention in the market due to recent short squeeze activity. According to data shared by Unusual Whales in a post on June 9, the reported short volume as of June 7, 2024, has surged to 103,785,384 shares, surpassing the figure from January 22, 2021, which was 97,123,046 shares.
The increase in short interest indicates that many investors are betting on a decline in GameStop’s stock price, despite the potential for another surge driven by retail traders. The high level of short interest creates a precarious situation where any positive news or coordinated buying efforts could lead to a rapid price escalation as short sellers rush to cover their positions to avoid losses.
While retail investors are captivated by the meme stock, GameStop’s financial performance tells a different story. The company reported a loss of $32.3 million on revenue of $882 million for its fiscal first quarter, ending in June, down from a loss of $50.5 million on revenue of $1.2 billion the previous year. This decline was attributed to decreasing sales of hardware, software, and collectibles.
In response to market volatility, GameStop has announced plans to stabilize its finances by selling 75 million shares of common stock, with proceeds intended for general corporate purposes such as potential acquisitions and investments. This follows the successful sale of 45 million shares in May, generating $933.4 million in gross proceeds.
The return of Keith Gill, also known as “Roaring Kitty,” has reignited excitement around GameStop. Gill, a key figure in the meme stock frenzy of 2020 and 2021, has historically influenced investor sentiment through his engaging content. His recent online activity has already caused significant fluctuations in GameStop’s stock price, surging by up to 47% on June 6.
With ongoing volatility surrounding GameStop stock, the impact of current short interest levels, especially with influential figures like Gill making a comeback, remains crucial for market observers. Despite correcting nearly 40% in 24 hours and trading at $28.22 at the time of writing, GME remains bullish year-to-date, having rallied approximately 70%.
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