GameStop Stock Drastically Pivots Due to Reddit

By Sam Hargrave Posted:

It's no secret that once revered video game outlets like GameStop have seen a significant decline in popularity over recent years. As the industry continues to further push towards digital game sales, this natural progression will seemingly — one day — leave these businesses in the dust.

Alike the situation for many major businesses, 2020 proved to be one of the toughest years yet for GameStop, with their stock value plummeting as low as $3-4 per share as they dealt with the struggles of the coronavirus pandemic.

Many stock market enthusiasts may be familiar with the popular US stock market subreddit r/WallStreetBets , where over two million participants discuss stock and option trading. In an unprecedented move, Redditors have managed to sway the stock market providing retail giant GameStop with an all-time high stock value reaching heights close to $150 per share.


Stock traders on the WallStreetBets subreddit managed to massively increase the value of GameStop's stock from roughly $20 per share on January 11 to an unanticipated $150 today.


Contrary to what may seem like the most obvious explanation, the stock value increase isn't actually indicative of positive performance from GameStop. In fact, they may currently be the most overvalued stock on the market according to some.

Many experts believe the WallStreetBets community is taking advantage of the massive public social media following to carry out a “pump and dump scam." The basis of the scam relies on large numbers of traders buying large amounts of a given stock, therefore increasing its value drastically.

Now that the stock value has reached an all-time high, this leaves traders with a clear opportunity to sell their stocks and make huge profits. This is something that would prove disastrous for GameStop as they will see a huge, very sudden, crash in their stock value from this all-time high valuation.

The concept of mass social media movements being able to have such a significant influence over the stock market seems to set a dangerous precedent for the future. Those who participated in this scam from the beginning stand to make huge amounts of money from it, making it extremely likely for similar movements to take place in the future.

- About The Author: Sam Hargrave
Sam Hargrave is the Associate Editor at The Direct. He joined the team as a gaming writer in 2020 before later expanding into writing for all areas of The Direct and taking on further responsibilities such as editorial tasks and image creation.