Just when we thought GameStop’s short squeeze was over we begin to see GME gain some momentum. GameStop has been the heart of the wallstreetbets movement and continues to have a strong sentimental hold on retail investors and gamers alike.
The retail investors who missed GameStop’s first squeeze either bought AMC shares or bought GME while it was still high. And if you got in when it fell back down to $40, well you’re doing pretty well right now. So, will GameStop see a massive short squeeze again? Here’s what we know.
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GameStop closed at $204.97 on Friday September 17th.
Trading volume is currently sitting at 3.6 million with 3.5 million being GameStop’s average volume. Today’s move was amazing for the ape community.
Understanding the short-seller
GameStop has taken the entire internet and finance world by a storm. What is happening nowadays. Retail investors over at r/wallstreetbets have opened Pandora’s Box on short-sellers and hedge fund institutions.
Short-sellers are investors who short the stock.
Shorting a stock is the process by which sellers essentially bet on the stock price to drop. They borrow stocks at a higher cost and sell the stock low, profiting the difference.
We’ve seen GameStop drop down and consolidate at $40 after its gamma squeeze peaked close to $500 per share back in January. As of September 17th it is trading around $204.97.
The stock has made a massive climb after some serious consolidation. It looks like GameStop is prepping itself for another gamma squeeze.
Could we finally see that GME squeeze everyone’s been waiting for?! I think its time.
See, GameStop’s short interest is still rather high and not all short sellers closed their positions back in January. This means the stock still has loads of room to go bonkers.
What is a short-ladder attack?
A short-ladder attack is a strategy performed by short-sellers where they bid on the stock at a significantly lower sell price and purchase it from one another. Thus, driving the share price lower.
How do you spot a short-ladder attack? When the stock knows nothing but gains, but something keeps pushing it down until over and over again, that’s when you’ll know.
Why GameStop has potential for a second short squeeze
- Short-sellers didn’t learn their lesson from the first time. GameStop stock is still being heavily shorted.
- With GameStop becoming a technology company, its value has not only significantly gone up but it now has even more potential to keep driving its momentum.
- Retail investors have a strong conviction towards GameStop investment. This means they’re not willing to sell the stock which in turn creates a supply and demand scenario with short-sellers who have to close their positions.
Short Share Availability and Short Borrow Fee Rate
You can see GameStop’s short share availability and short borrow fee rate using this link (via. Fintel)
This number of course changes every day and can be expected to rise as hedge funds continue to short GameStop stock. However, the short borrow fee rate isn’t a catalyst for GME to squeeze.
I’m excited for my subcommunity that holds both GME and AMC stock because both are about to skyrocket past Pluto.
GME Stock Analysis
Roensch Capital goes over the data for trending stocks. The information is very easy to understand and gives you insight in the market from an analysts perspective.
Be sure to check out recent videos as they’re being uploaded to stay updated with any changes that occur in the market with GameStop.
It is important to note that I am not a licensed financial advisor. Like many traders and self taught investors, all speculation is based on educated estimations based on highly reliable analysis, patterns, and documented news charts.
Volume is key to a second GameStop short squeeze
Just like AMC, GameStop will need to see a continuous runup in share volume.
When retail investors continue to buy and hold GameStop stock, short-sellers shorting the stock eventually have to buy back the stock. This demand and supply scenario results in various gamma squeezes.
The gains we’ve seen with GameStop have been a series of gamma squeezes, or incremental gains.
Usually what follows after gamma squeezes is a short squeeze if it has enough volume. The volume of shares depends on how much retail investors are purchasing GameStop stock or selling it.
You can keep an eye on it via. Yahoo Finance.
How Soon Will A Second GameStop Short Squeeze Happen?
There is so much volatility occurring in the stock market at the moment. Such volatility is usually a sign of an upcoming short squeeze as we saw back in January.
Not only are retail investors experiencing a lot of volatility, but GameStop stock seems to be in bullish territory which is great for volume.
FOMO (fear of missing out) continues to bring in new retail investors which is a great driving factor to the stocks volume.
GameStop announces fourth quarter earnings for 2020 (ARCHIVE)
GameStop announced that it will be releasing its fourth quarter and fiscal earnings for 2020 on Tuesday, March 23rd after trading hours.
This announcement is very important because owners of the company will go over earnings, as well as future assessment that let retail investors know the direction of the company as a whole.
This of course can have a very good impact on the stock price should the reports come back positive.
Here is the link to GameStop’s news release –> LINK.
However, like most companies affected by the pandemic, the numbers for the last quarter weren’t the best. This shouldn’t affect the stock price moving forward though. There’s too much sentiment surrounding this stock now.
Retail investors now have the power to save any company they wish to save. Now it’s only a matter of time for GameStop to step up and raise capital so that they can innovate and provide more value back.
GameStop is currently looking for ways to operate more efficiently. While the Reddit community was able to keep them from going bankrupt, the company as a whole will need to continue kicking butt.
Here’s what’s been going on with GameStop recently.
Current GameStop news
- GameStop introduces Matt Furlong as the new CEO of the company.
- GME shares are still up nearly 1100% this year-to-date with the company’s valuation at $15 billion.
- Bullish GameStop options are still currently being heavily traded
Prior to GameStop, Matt Furlong worked at Amazon in Australia overseeing the growth of operations. He also worked in brand and marketing for Procter & Gamble years before.
The skills to grow operations and to properly brand and market will benefit GameStop immensely.
What can retail investors do to tackle shorting?
If retail investors want to counter GameStop’s stock price from plummeting, they’ll have to continue to hold and buy the stock.
This short squeeze play will require patience.
If you hold a position in GameStop, it’s important that you ask yourself what your reason for holding is. Does your DD provide you with the confidence to stick to it longer if need be? If so, stick to your convictions and trust the process.
Unfortunately, I didn’t get in on GameStop before it gamma squeezed so I took a position in AMC instead. Taking this position has been one of the best financial decisions I’ve ever made.
I would take a position in GameStop if it was more affordable. Regardless, I like the stock and I love the community even more.
Will GameStop finally short squeeze?
I think GameStop is preparing itself to put short sellers out of their misery. The stock has been havoc to hedge funds and we can tell they’re giving out primarily due to this massive breakthrough we’re seeing now.
And although I personally don’t hold GME stock, I have a lot of awesome memories at GameStop which I would actually like to share with you at the end of this article.
Now let’s talk about a little justice. A major hedge fund that was attacking GameStop has now been reported to lose a significant amount of money.
Melvin Capital suffered 49% loss 1st quarter
Ladies and gentlemen this is massive. Melvin Capital is a hedge fund that has been shorting both GameStop and AMC stock.
Melvin Capital suffered a 49% loss it’s first quarter of 2021, via. Markets Insider.
Here’s why this matters:
- Not only are shorts losing money every day but huge hedge funds are bleeding
- This is a huge win for retail investors
- Unless shorts close their positions, hedge funds will continue to suffer
- Interest rates can skyrocket for short sellers enabling them to close their positions
We’ve see GameStop’s short borrow fee decrease but I wouldn’t be surprised if it begins moving back up very soon. Hedge funds have been trying to obliterate our beloved GameStop from the face of the planet. Something about them losing a lot of money feels like justice.
Believe me, I’m 100% for making money. The ethical way. You should be supporting beloved companies, not targeting them just because you see an opportunity to kick someone when they’re down.
Karma is about to get a lot worse for hedge funds betting against both GameStop and AMC.
Will GameStop stock go up again?
As long as the stock continues to be shorted and held, GameStop can expect a series of gamma squeezes to continue pushing the stock up. This will inevitably lead to the ultimate short squeeze.
Fundamentals can also drive GameStop’s stock price up. The company will have to run efficiently by being able to meet projected goals. Although this is not a fundamental play, mainstream media still has some influence over this.
Short sellers continue to face devastating losses from shorting GameStop. Hedge funds are about to burn their second hand after playing with fire again.
Gamma squeeze vs Short squeeze
A gamma squeeze are momentum gains. These usually occur from call options closing in the pocket resulting in heavy buys or purchases in the market.
A short squeeze is vigorous and can spike with no warning. This is where you see 100% gains in a matter of seconds and minutes. A short squeeze can even reach 1000% and 10,000% gains.
What is your first GameStop memory?
Leave a comment below. Do you remember your first GameStop memory? I’m sure you have many. I remember the first time my brother and I went inside a GameStop it was unreal.
It was my first time inside an actual video game store. The coolest thing was seeing how many different games and accessories they had for all the consoles at the time.
Some of the most awesome memories at GameStop was seeing that brand new game on display. For me, it was Guitar Hero. My god. Seeing all the marketing behind the game and the guitar in display was heaven.
I also remember the employees giving you close to nothing for a used game, lol. What are some memories you have of GameStop? I would love to hear from you. Leave them in the comment below.
A quick message from Frank Nez:
A lot of you have been sharing my posts on Facebook Groups, Reddit, Discord chats, and Twitter. Words can’t explain how grateful I am for you sharing these articles. Thank you.