Differences between Investing vs Trading
Differences between Investing vs Trading
GameStop is a major video gaming and electronics retail firm whose headquarters are based in Texas, USA. Founded in 1984 under the name of Babbage, the company changed to its current name at the start of this century and has a worldwide presence.
The majority of the GameStop stores are located in the US, but they also have locations in Canada, Australia, Europe, and elsewhere. 2004 to 2016 was a boom period for GameStop, due to the growth in gaming over this period. This was followed by a period of tougher market conditions where the company lost ground due to the increase in online sales and games downloads changing the market.
2018 saw the company’s largest losses to date, as they admitted that they were unable to attract a buyer due to a lack of available financing on suitable terms. However, it remains a big player in the gaming market and a widely-recognized brand.
On the morning of January 28th, AMC and GME stocks saw unprecedented volatility. AMC stock prices surged, while gme stock prices plummeted. The cause of this volatility was a scandal involving the popular investing app robinhood. it was revealed that robinhood had been selling order flow to high-frequency traders. This allowed those traders to front-run amc and gme trades, driving down prices and costing investors millions of dollars. In the wake of the scandal, robinhood has been facing intense scrutiny from both regulators and the public. It remains to be seen how this scandal will impact the future of Robinhood and the markets.
The GameStop stock is traded under the GME ticker on the NYSE. It hit the headlines in early 2021 because of a widely-spoken about short squeeze that caused its value to rise by over 30 times in less than a month of trading. This led to a period of ongoing volatility in the GameStop share price that led to some investors making a lot of money and others losing.
Before the short squeeze took place, the stock had been dropping in value due to the changing market conditions that the company faces and the losses that they posted since going into decline around 2016.
The big question facing investors since then is whether they think that GameStop can turn the situation around and thrive in the digital gaming era or not. A high level of volatility since then suggests that this question has remained relevant and has ensured that the GameStop share price has fluctuated enormously.
For adventurous investors, it is the sustained volatility of GameStop stock that is going to be most appealing. There is typically no GameStop share dividend paid out, but the way that the price has varied so widely means that it may be attractive for someone looking to try and earn big profits.
More cautious investors could turn to funds that include GameStop as well as other stock. Either way, this is a stock that has had massive swings in the past and that may have something similar happen to it in the future, so it is more likely to attract someone looking for a higher than average volatility level.
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* The spreads provided are a reflection of the time-weighted average. Though Skilling attempts to provide competitive spreads during all trading hours, clients should note that these may vary and are susceptible to underlying market conditions. The above is provided for indicative purposes only. Clients are advised to check important news announcements on our Economic Calendar, which may result in the widening of spreads, amongst other instances.
The above spreads are applicable under normal trading conditions. Skilling has the right to amend the above spreads according to market conditions as per the 'Terms and Conditions'.
Are Gamestop shares a good investment?
The company is heavily reliant on the gaming industry, which is notoriously volatile. Gamestop shares are also highly traded, which can lead to large swings in price. As a result, Gamestop may not be suitable for all investors. Before investing or trading via CFDs in Gamestop, it is important to carefully consider your risk tolerance and investment objectives.
Who owns most Gamestop shares?
Gamestop does not have a majority shareholder; instead, it is owned by a large number of shareholders. The largest shareholders include Fidelity Investments, Vanguard Group, and BlackRock. Gamestop shares are also popular with individual investors, many of whom hold the stock for the long term. Gamestop shares have been highly volatile in recent months, due to investor speculation about the future of the gaming industry.
Do Gamestop shares pay dividends?
Gamestop shares do pay dividends to shareholders. GME is the Gamestop Corporation's ticker symbol on the New York Stock Exchange, and the company has been paying dividends since 2015. Gamestop pays out a quarterly dividend, meaning that shareholders receive payments four times per year. The dividend payments are typically made in March, June, September, and December. Gamestop has increased its dividend payments every year since 2015, and the current dividend yield is 1.6%.
This means that for every Gamestop share that a shareholder owns, they will receive 1.6% of the Gamestop Corporation's annual profits as a dividend payment. Gamestop is not currently repurchasing any of its own shares, but it has authorized up to $300 million for share repurchases in the future. As of February 2021, Gamestop Corporation had a market capitalization of $24.4 billion.
What was the GME short squeeze in 2021?
GME shares exploded in value in early 2021 after a short squeeze was initiated by retail investors on Reddit. The company, along with AMC and other companies that had been targeted by hedge funds for short selling, saw their stock prices increase dramatically as retail investors bought up shares and forced the hedge funds to cover their positions.
The GME short squeeze was notable not only for its size and scope, but also for the fact that it was driven entirely by retail investors using platforms like Robinhood.
Which are the competitors of GME shares?
While GME is still the top game retailer in the United States, it is facing stiff competition from online retailers such as Amazon and GameStop. In addition, many investors are worried about the future of the company in an increasingly digital world. However, GME remains optimistic about its future, and it is working hard to compete in the ever-changing retail landscape.
Will Gamestop shares rise in 2023?
Gamestop shares have risen by almost 20% YTD, and once more, shorts are being squeezed. High borrow costs are cited as a secondary source of losses for short-sellers. Can the rally continue to be propelled by short squeezes?
Squeezed short positions aren’t the most reliable fuel for market rallies. Over time, the costs can lead to despair and shorts eventually throwing in the towel on their short positions - the pain trade.
Is Gamestop profitable?
Unlike some of the other cash-burning memestocks, Gamestop reported a profitable quarter to close out 2022, sparking a 50% rally in the extended trading session.
CEO Matt Furlong said “We're aggressively focused on year-over-year profitability improvement while still pursuing pragmatic long-term growth,”
However, the increase in profitability was driven by cost-cutting rather than top line revenue growth, leading analysts to question if profitability would continue.
Will Gamestop go bankrupt?
Probably. Businesses that can’t turn a profit don’t have a good track record of turning things around. Gamestop’s business model was flawed. The high dependence on physical game sales was a key weakness as more consumers switched to purchasing games digitally.
Although Gamestop is trying to improve their digital offering, it may be too late.
Is there insider activity on Gamestop shares?
Director Larry Cheng bought 5,000 shares on March 29th 2023 at an average price of $22.79 each, for a total value of just under $114,000. Cheng already owned an additional 7,000 shares in a personal account.
Will a recession send Gamestop shares lower?
Gamestop shares are likely to head lower in a recession. Usually, recessions result in a credit crunch, and the least profitable businesses frequently end up in Chapter 11 bankruptcy and debt restructuring arrangements.
While Gamestop has tried to innovate, it remains a business with no economic moat and no competitive advantage. The push to move into e-commerce has also stalled, jobs have been cut, and existing stores have become mini-fulfillment centres.
Will NFT’s save Gamestop?
NFT prices plummeted globally in 2022, and even though Gamestop’s NFT platform traded as much as $13 million in July, that had fallen to $600,000 by January 2023.
Without a new grand strategy, Gamestop looks to be in real trouble as a viable business. The current cash levels offer a safety buffer for now, but the memestock mania may have simply prolonged the inevitable.
What does this mean for GME’s share price?
Dynamics in the options space and fluctuations in short interest and borrow rates may be a far better indicator for changes in the share price than anything the company can do in a slowing economy. Even now, this is a stock that trades quite separately from the traditional ‘fundamentals’.
Why Trade [[data.name]]
Make the most of price fluctuations - no matter what direction the price swings and without capital restrictions that come with buying the underlying asset.