What Happened?
Shares of video game retailer GameStop (NYSE:GME) jumped 8.5% in the morning session after the company reported impressive third-quarter earnings, which blew past analysts' expectations. Its gross margin also outperformed Wall Street's estimates, fueled by a pivot to high-margin products and better control over stock levels. On the other hand, its revenue fell short. Overall, this quarter had some key positives.
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What The Market Is Telling Us
GameStop’s shares are extremely volatile and have had 52 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock gained 119% on the news that meme stocks soared (AMC Entertainment (NYSE:AMC) +14%, Newegg Commerce (NASDAQ:NEGG) +14%, Beyond (NYSE:BYND) +14%). GameStop's stock rally also coincided with the return of the famous Wall Street Bets (Reddit stock trading forum) trader Keith Gill (known online as Roaring Kitty) to Twitter (also known as X.com) after three years. The moves likely point to the growing interest of retail investors in the stock market.
GameStop is up 77.9% since the beginning of the year, but at $29.65 per share, it is still trading 39.2% below its 52-week high of $48.75 from May 2024. Investors who bought $1,000 worth of GameStop’s shares 5 years ago would now be looking at an investment worth $21,448.
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