How Does The Current Rally In GameStop Stock Compare With Its Fall In The 2008 Crash? (2024)

FAQs

How does the current rally in GameStop? ›

The rise in GME is driven by a broader rally seen in “meme” stocks (refers to the stocks that see growth primarily fueled by social media attention). GME stock saw increased trading activity after the social media account – Roaring Kitty – became active after a few years.

GameStop Corp. shares took a dive Wednesday after the videogame retailer surprised investors with a quarterly profit, but sales dropped more than 30% to below analyst expectations.

The surge followed the reemergence on Sunday of a Reddit account associated with Keith Gill, the trader known as Roaring Kitty, whose online posts helped send the stock soaring in 2021.

From October 6–10, 2008, the Dow Jones Industrial Average (DJIA) closed lower in all five sessions. Volume levels were record-breaking. The DJIA fell over 1,874 points, or 18%, in its worst weekly decline ever on both a points and percentage basis. The S&P 500 fell more than 20%.

Gill was one of the main posters on the WallStreetBets subreddit - a thread where Reddit users can post on a particular topic - which drove eye-popping rises in GameStop's stock in 2021. Retail investors bid up the shares, targeting short-sellers, who had been betting on GameStop's stock falling.

What Happened: Shares of video game retailer GameStop (NYSE:GME) fell 20.5% in the morning session after the company reported first quarter earnings results. Its revenue and EPS missed analysts' expectations, and it didn't share an outlook for the rest of the year. In addition, the company continued to burn cash.

GameStop has suffered financially since the pandemic, as many consumers shift away from physical stores and toward digital transactions.

GameStop's revenue has also been on a decline, falling from $6 billion in fiscal 2022 (fiscal ends in January) to $$5.3 billion in fiscal 2024. Although the company's reported earnings did improve from $(1.31) to $0.02 over the same period, its margins are very thin.

From January 13, 2021, GME shares saw a sudden and drastic increase in price and in return volatility. The run-up was reported to have been led by a large increase in trading by retail investors using the Robinhood Financial platform, organized via social media, in particular the WallStreetBets chat forum on Reddit.

Some big names lost money on GameStop, but others made a bundle. The same goes for everyday investors — some won, some lost, and plenty were just in it for the casino-like ride. Wall Street is paying more attention to individual investors than it used to, but they're not keeping CEOs up at night, either.

How GameStop stock price was manipulated? ›

Former SEC chief Clayton says Keith Gill may have manipulated market for GameStop shares. Former Securities and Exchange Commission Chairman Jay Clayton said Tuesday that Keith Gill may have committed market manipulation with tweets that "triggered... euphoric and speculative buying among the retail community."

The bounce-back from the 2008 crash took five and a half years, but an additional half year to regain your purchasing power.

The fastest market crash in history came on Oct. 19, 1987. The S&P 500 and Dow Jones Industrial Average each plunged more than 20% in a single day, the biggest single-day percentage decline in history.

GME Stock 12 Month Forecast

Based on 1 Wall Street analysts offering 12 month price targets for GameStop in the last 3 months. The average price target is $10.00 with a high forecast of $10.00 and a low forecast of $10.00. The average price target represents a -51.57% change from the last price of $20.65.

Shares of video game retailer GameStop (NYSE:GME) fell 14.8% in the morning session after the company reported second-quarter earnings results. Its revenue unfortunately declined and missed by a wide margin, consistent with the broader weakness we've observed in the Consumer sector during the quarter.

The profit on Keith Gill's GameStop trades

It consisted of two parts: 5 million shares of GameStop stock purchased for $21.27, worth approximately $116 million at the time of the post. 120,000 June 2024 $20 call options purchased for about $5.68, worth nearly $66 million at the time of the post.

Market And Investor Sentiment

Some have faith GameStop will rise again, citing the company's improved balance sheet. Others point out, rightfully so, that Cohen shared no specific plans for a turnaround.