The Rise and Fall of GameStop

No matter how far the stock prices go, Gamestop locations are closing by the thousands. Picture taken on January 8, 2010, all rights reserved

The GameStop stock has sunk to the ground after thriving for over a week, dropping several times below $100 per share today, which is more than $200 lower than the last week.

GameStop’s stock started the year at $17.25 and started rising until it peaked around $347.51 on the 27th of January. The investors on a well-known Reddit group called WallStreetBets bought their share using investment apps such as “Webull” and “Robinhood” while proving their point to the investors of Wall Street who lost money from their short sales.

While a short break will send the stock to unbelievable heights, the rewards do not last long. The share price will return sooner or later to a degree that is more in line with the key viewpoints of the business. GameStop bulls learned the hard lesson last week when the GameStop portfolio plummeted 80 percent, giving up much of its January profits (but not all of them).

After a steep drop yesterday, freefall ensured the stock continued decreasing all day long. The fall now seems to be gaining traction, as Bloomberg notes that the short sellers are bailing out.

Although it seems improbable now, the stock could rally again, especially in the long run. Even if the physical game demand continues, the Reddit hype which helped to drive up the corporate valuation from $1 billion to $20 billion will eventually end. Meanwhile, the people on WallStreetBets are trying to encourage others to hold their investments.

From this, it is easy to see that there is no easy road to wealth. For the wrong reasons, we get mixed up and invest in the wrong firms. This does not mean investing in stocks is a bad idea. In reality, you can create your own riches by patiently playing the long game with several top stocks.