Resurrection stories are mostly rare. They often happen only in religious, mythical or fantasy scenes. Resurrection — the revitalisation or revival of something dead or surely heading to its end — is so rare that very few people believe it’s possible.
But, resurrection stories happen — even in the cutthroat world of business, finance and investments. From almost certain death to perhaps the greatest financial frenzy in a decade, GameStop stocks — after increasing up to 1600% at some point— have now become a symbol that anything is possible in the world of stocks, trading and investment. The GameStop saga became, for a moment, the only relevant news in the stock market while outpacing the best stocks to buy in the UK and stocks in other parts of the world.
Here’s a concise version of how the great resurrection story unfolded.
Where was GameStop before it all happened?
GameStop stores used to be home to millions of young game-loving people. These stores were the go-to place for trading in old games for new ones, meeting fellow gamers to engage in conversations about the biggest franchises and building strong gaming profiles.
The company rode on the high of the relevance of its stores and opened several stores around the world. GameStop stores were everywhere — the United States, Canada, Australia and Europe.
GameStop was an extremely successful company especially in the years between 2006 to 2014. Throughout that period, GameStop completed the acquisitions of many other stores. For example, in 2005, GameStop acquired EB Games for $1.44 billion.
When a company is doing great, it reflects on its stock price. Under normal circumstances, when a company is underperforming, there should also be a decline in stock price.
This was the case for GameStop in 2017. Due to declining sales in physical game media and a newly found preference for online game downloads, GameStop began to experience a decline in sales. Gamers seemed to prefer getting their games from the likes of Xbox and PlayStation to the detriment of physical game stores.
The result of this decline in market share led to a 16% drop in shares of GameStop stock. More shares dropped in 2017 as the non-physical gaming industry got into its stride.
At some point in 2018, GameStop engaged in sales talks. But, that did not turn out so well. The company later announced in 2019 that it would not be up for sale anymore due to a lack of finding a prospective buyer who would buy on their terms. According to reports from the Business Insider, the GameStop shares crashed to their lowest point in fourteen years.
GameStop shares were worth $11.16 per share. The end had come.
A series of events centred around the subreddit “r/wallstreetbets” turned things around for the stock price of GameStop. The prevailing theory of what spurred the community to act on GameStop stock is that it was a revolutionary act to punish Wall Street hedge funds for their role in the financial crisis of 2008.
The reason for the increase may be uncertain but there was no uncertainty about the surge in the price of GameStop stocks. As of January 27, 2021 the stock price had increased by 1500%. By the end of January, the stock closed at $325 per share.
The unpredictable blend of retail investors and a sense of social justice had caused GameStop shares to find new life — while frustrating big Wall Street names too. At their peak, GameStop shares traded at $483 per share.
What’s happening now
The GameStop frenzy is much quieter now but the resurrection has happened already. As of the market close of July 6, 2021, the GameStop stock was valued at $199 per share. This is much higher than it was a year ago.
While increased share price — especially in GameStop’s case — is not a sign of a healthy company, the resurrection is having effects on the company’s actual operations. The company has added a new chairman and some highly rated executives to chart a way forward.