GameStop’s share price soared 70% last week! Should I Buy US Stocks Now?

GameStop (NYSE: GME) Is a US-based company that sells home appliances and video games to the general public. It relies primarily on physical stores, with over 5,500 stores worldwide. As a result, GameStop’s share price has fallen in recent years as more consumers can buy games and add-ons online or in-game. Interest in equities has risen in the last six months, and the company headlined last week. Incredible turns, individual investors are pushing up stock prices, forcing institutional investors to close short positions.

Why all hype?

Like most companies, GameStop is hitting revenue with Covid-19. As your online sales grow, you need to move away from your physical location and make more online investments. Third quarter results This shows that online sales increased by 257%, but overall revenue decreased by 30.2%. GameStop’s share price has been struggling for several years, trading at around $ 5 at the end of last summer. This is down from $ 45 in 2014.

As a result, some hedge funds and investors have shorted stocks. Shorting stocks is when investors think the price will go down, and if the stock price goes down from the shorted level, it will make a profit. This entails unlimited risk, as stock prices can rise infinitely. When buying stocks for a long time, the risk is limited in that the stock price only drops to zero.

GameStop’s share price hype has begun to skyrocket in recent weeks, primarily due to speculative individual investors buying. It was overrated. More investors piled up and bought stock, forcing Mr Left to close his position. To do this, he had to effectively buy the stock (the opposite of his first move) and shot it even higher.

Can GameStop’s stock price continue to rise?

This is an interesting example of individual and institutional investors, but that’s all I see. GameStop is not a company with strong fundamental value in my opinion. I’m not saying that this is the situation of pump and dump, but I think individual investors are pushing stock prices into the bubble. At $ 65 per share, valuations just don’t stack up. This is arguably a deficit company ($ 18.8 million in the third quarter) operating in a shrinking sector.

If the company succeeds in reinventing itself through a complete online service, it could return to profitability in the long run. But at this point, it doesn’t make sense to me to buy when the stock is at its highest ever.Instead, I’ll look near my house UK Top Stocks I would like to consider purchasing at this time.

jonathansmith1 There are no positions in any of the listed shares. The Motley Fool UK does not have a position in any of the listed shares. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by considering different insights, Better investors than us.

GameStop’s share price soared 70% last week! Should I Buy US Stocks Now?

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