Ben Gilbert / Business Insider
- GameStop rose as much as 6% early Friday as retail investors piled up more cash in the high-flying stocks.
- Andrew Left, Citron Research partner, highlighted five reasons why the stock crashed to $ 20 on Thursday.
- The purchase by ordinary investors has more than doubled GameStop’s shares this month. Yet technical indicators indicate that the rally is losing steam.
- Check out GameStop Trading here.
GameStop jumped as much as 6% early Friday when investors who wanted to stop short sellers further piled up in the stock.
The share of the video game retailer more than doubled in January after changes to the board of directors caused an explosive rally. The upswing intensified as short sellers dropped their bearish positions and an increasingly large crowd of retailers cheered the stock higher.
The battle between shorts and bulls entered a new phase on Wednesday after Andrew Left’s managing partner, Andrew Left, posted a video highlighting five reasons why he expects GameStop shares to crash to $ 20. Left initially planned to stream himself to explain his short position, but attempts to hack into his Twitter account forced him to record the video.
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The managing partner downplayed GameStop’s increased valuation and dependence on physical locations in the nearly 7-minute video. Left also called on the traders to double the stock and insisted on ‘knowing who is on the other side of the trade’ and respecting their experience in the market.
“It’s a retailer that is failing in malls,” he added. “The amount of people who are so passionate about raising GameStop, not because of any fundamentals, just shows the natural state of the market.”
Members of the WallStreetBets subreddit are unabashed. The forum, known for its crude-market-based humor and the celebration of the three-figure portfolio swing, remains largely strong on the stock and contains several posts that are left because of its positive position. Commentators are urging each other to maintain ‘diamond hands’ and keep their GameStop shares indefinitely. Others call on retailers to join them and increase inventory even higher.
While it remains to be seen who will eventually win, some indicators suggest the Bulls’ party is coming to an end. The relative strength index for GameStop shares – a measure of the momentum of the stock – is just below 80 after climbing 10% on Thursday. Read more than 70 indicates that the stock has been bought over and that the index has not fallen below the threshold since January 12.
GameStop closed at $ 43.03 on Thursday, up 123% year-over-year. The company has two “buy” ratings, two “hold” ratings and one “sell” rating from analysts.
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