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GameStop, the video game chain in the United States, has not had the best of times in recent years. In fact, it seems that last year did not close quite well with a less than satisfactory sales season where consoles were released. Despite all this, his shares stood out and reached their highest value in many years.
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As Bloomberg reports, GameStop shares rose 94% on the afternoon of this Wednesday, January 13. This was a breath of fresh air for the company, whose market value has dropped considerably in recent years.
With the good performance of the shares in the last hours, the value of GameStop increased a total of 118% in the last days. Thanks to this, the shares reached the highest value they have had since November 2015.
Why did GameStop’s share value increase?
Now the question is, what was it that caused the change of landscape for a company that seemed destined for the worst? There is no short or simple answer, as there are different factors that seem to have had an influence.
One reason that seems to have had the most impact is the announcement of the addition of Ryan Cohen, co-founder of Chewy Inc., to the GameStop board of directors. According to analysts, this market response seems to indicate that they are confident that Cohen and his colleagues at Chewy will be able to transform GameStop into a successful digital commerce.
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On the other hand, it is also believed that the value of the stock soared in such a way because it experienced a phenomenon known as short squeeze. In simple terms, it happens when a stock increases in value, forcing those who bet against it to buy to hedge and avoid losses. This causes the purchase volume to exceed demand and the price to skyrocket.
“There is a short squeeze at GameStop, but the squeeze is not the main force behind the price change,” said Ihor Dusaniwsky, director of analysis at S23 Partners. “This is like the chicken and egg question. Did the long-term purchase lead to the short squeeze or did the short squeeze lead to the long-term purchase?
And you, what do you think about it? Do you think this marks the beginning of a new era for GameStop?
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