Headline: What Happened to Game Stocks?

Author: Giselle Liu

yzl5979@psu.edu

Last Friday, young retail investors have pushed the shares of video games retailer, GameStop, to a record high. They surprisingly won the competition to institutional investors in the New York stock exchange (NYSE). Although the conflict over the firm has only recently been mutated into headlines, it is regarded as the latest (and perhaps the fiercest) battle in a long-running struggle between old Wall Street and the new outsider investment class.

At the beginning of this year, the opening price of GameStop was 17.25 dollars, then it went into a free fall. Two weeks ago, even the price was doubled, it ended up with 65.01 dollars as the share. According to Bloomberg, it raised up 51% on the last weekday, Jan. 22nd, that week. However, as of a week later, the share has reached 325 dollars on Jan 29th.

The dramatic ending from last week marked the ten least stable trading days historically. At the moment on Friday, GameStop became the most active company, with 200 million dollars of the market value, in the US. In short, even GameStop has been teetered on the highest point, it’s still the most popular stock on Wall Street.

In comparison, one of the most influential financial companies Citron Research had predicted last week that the share prices of GameStop would fall back to 20 dollars per share. Meanwhile, a senior analyst Michael Pachter from a well-known personal financial services and investments company Wedbush Securities had announced that the share prices of GameStop would drop to 16 dollars per share. Most tellingly, even the valuations were alarming enough, there was only one Wall Street analyst who gave GameStop a positive valuation, according to Bloomberg Database.

As it turns out GameStop was pushed by a lot of fledglings perhaps. They talked about stock trading through social media. The core of this phenomenal action is WallStreetBets from Reddit. Overall, the group’s actions have been providing more and more meaningful influences. It dates back to 2013 when financial service company Robinhood offers young generations a platform to trade for free, with extremely simple requirements and gamified interfaces. Loads of young investors started their paths investing in stocks because of four characteristics, affordability, convenience, undemandingness, and competitiveness. These are also four fundamental reasons why GameStop boosted up like a rocket.

Analyzing young generations’ preferences on investing is going to be a crucial task for many analysts.