The GameStop Corp. (NYSE: GME) stock price fell 6.21% two days after news leaked that Sony Pictures was set to release a movie titled ‘Dumb Money’ depicting the massive overnight fortunes made and lost by amateur investors during the Gamestop short squeeze of 2021.
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The movie is based on Ben Mezrich's book The Antisocial Network and tells detailed stories of how everyday investors made and lost fortunes during the Gamestop short squeeze. Retail investors discovered the power they could wield over the Wall Street elite by buying shares of highly shorted stocks and pushing their prices higher.
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As a result, Gamestop shares rallied to dizzying heights to trade above $120 in January 2021; the shares have since returned to earth. Investors in the movie rental company were on a roller coaster ride for most of the year as they rallied higher severally, but each time crashed back to earth as the institutions pushed back.
GME stock is trading at a tiny fraction of its peak value as the company failed to capitalise on the momentum generated by the short squeeze to launch new services and pivot into other markets, given that the movie rental business is in secular decline.
The growing popularity of movie streaming services such as Netflix has made the movie rental business obsolete. This explains the long-term decline in Gamestop shares leading up to 2021, when the short squeeze breathed new life into the stock.
The short squeeze allowed Gamestop to raise money, which it was supposed to plough into new business ventures. Still, the company has yet to shift into other business verticals that could generate revenues and secure its future.
Gamestop ventured into the crypto and NFT space and could not get the businesses to make money. The company finally had to exist both businesses after incurring losses worth millions. GME posted losses worth $160 million between March and June 2022 before exiting the crypto and NFT space.
The company reverted to its previous business focused on gaming, collectables and pre-owned products. These are not very profitable businesses, which explains the decline in GME’s stock price.
*This is not investment advice.
GameStop stock price.
The Gamestop stock price fell 6.21% to trade at $15.86, from Tuesday’s closing price of $16.91.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.