After Recent Price Spike, Can GameStop Hold onto Its Gains?

GameStop (GME) is up 24% for the day despite having lost a lot of its recent gains from an astounding price spike.

The stock jumped 167% in early May on news that one investor was holding five million shares of GME. That was the same user who started the stock buying craze of 2021 that turned into a market sensation at a time when the stock was priced incredibly low and the company was facing bankruptcy.

GameStop has not held onto those early May gains, but it is still higher than it was before the spike. At $28.71 a share, the GME stock has grown in value considerably from its previous price of $10.01. That was its value before the price spike, hitting a low point for the year then.

The recent rally did not last long, but the current rally could have a little more steam in it. That is due partly to how much lower this rally is than the previous one, and the fact that the price point is far more in line with the company’s true value. However, the value of GME stock in the near future will be largely dependent on what a single investor does.

Is GME Stock a Smart Investment?

That means that at any time, the stock could easily dramatically shift and trend much lower, bottoming out or dropping to $10 a share. Much of the buying frenzy right now is being led by Reddit users and social media rather than the intrinsic value of the company or GameStop’s earnings.

We anticipate a short-term uptrend for the stock that will die out in the next few weeks. The stock could go somewhat higher as the frenzy continues, but we fully expect the share value to drop sharply and unexpectedly. GME is currently one of the most volatile stocks on the market, making it an incredibly risky buy.