Investors expecting the stake in GameStop Inc. will get a boost as the latest government stimulus payments on bank accounts have been hit, according to Curtis Nagle, analyst at BofA Securities, will be disappointed.
Nagle wrote in a research note on Friday that he, in collaboration with BofA’s forecasting analysis group, has the potential impact on GameStop’s share GME,
out of the $ 1,400 stimulus payments currently being made.
By researching online forums like Reddit, Nagle said previous sharp increases in the number of stimulus and GameStop (GME) talks have coincided with large share price increases. But going forward, Nagle, who is clumsy about GameStop shares, said he believes any positive effect from the “voices” has already been played out.
‘[W]I believe the impact going forward can be limited, given two factors, ‘Nagle wrote in a note to clients.
• “Conversations [sic] It has apparently peaked on stimulus and GME shares have been declining over the past few days. ”
• “The number of recent conversations that include GME and stimulus is low.”
BofA Global Research, ListenFirst
Nagle also pointed out that GME trading volumes also declined gradually and short-term interest rates fell ‘substantially’. Nagle reiterates its underperformance rating on the stock and its $ 10 price target.
The trading volume averaged 34.5 million shares per day in March to Thursday, after an average of 43.6 million shares per day in February and 66.4 million shares in January, according to a MarketWatch analysis by FactSet data .
FactSet, MarketWatch
And the latest available exchange data showed that short-term interest rates as a percentage of public momentum were 26.1%, compared to more than 100% when the Reddit-induced trading rage started in mid-January.
GameStop’s share fell 6.7% in morning trading and fell 29.1% this week. This puts the stock on track to get a three-week winning streak in which it rose 551.6%, following a three-week loss in which it fell 87.5%.
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Instead of buying shares, it seems more and more likely that the current payouts of $ 1,400 and other discards will be spent elsewhere.
Read more: Student loans, charity and pet bills – here’s the readers’ way they will do with their $ 1,400 stimulus checks.
“Although we have not asked consumers how much they want to invest in the stock market in the future, the respondents intend to increase spending on activities restricted by COVID-19 in the last twelve months, including holidays, restaurants and travel, as well as home investment and decoration, ”Nagle wrote.
Despite this week’s decline, GameStop shares have risen 1,105.0% over the past three months, while the S&P 500 index SPX,
increased by 5.4%.