Why Is GameStop Stock Blowing Off The Roof?

Gamestop shares skyrocketed over the roof on Monday gaining over 238%, all thanks to retail investors (short sellers) including members of the Reddit Wall Street Bets forum, and is still rallying, adding another 92% to its share price today. It has increased more than seven-fold to $147.98 from $19 since Jan. 12.

This increase has spurred concerns over bubbles in stocks that hedge funds investors and other speculative players had bet would fall in value. Trading in GameStop stock was halted for volatility nine times on Monday and five times on Tuesday and is likely on the path to another halt today.

To some stock market professionals, the recent moves look symbolic of a stock market that may be overvalued at the end of a year dominated by floods of fiscal and monetary stimulus to ease the coronavirus crisis.

Despite the skyrocketing share price, A Lot of analysts are as convinced as ever that GameStop is a dying business and its stock price will fall sharply. They believe that it will all end badly for Gamestop shares but the time and date of this end remains unknown.

Gamestop presents a conundrum to investors, on one side there are analysts who see a bubble about to burst and on the other hand, there are speculators and short sellers who see an opportunity to make a quick buck off the market.

The market moves in cycles and whether you make a profit or loss depends on what part of the cycle you are in.