Can GameStop Stock Advance Continue After A 92% Surge In A Week?

GME: GameStop logo

The stock price of GameStop (NYSE: GME) has seen a stellar 92% rise over the last five trading days, while it is up 160% over the last ten trading days. We believe the stock, after the recent rally, may trend lower in the near term. The recent rise can largely be attributed to the news that investor Ryan Cohen would play a key role in the company’s e-commerce business.

Looking at the recent rally, the 92% rise for GME stock over the last five days compares with a 3.1% gain seen in the broader S&P 500 index. Now, is GME stock poised to gain further? It doesn’t look that way. While Cohen’s involvement in business is positive, it wasn’t unexpected, and neither is it such large news to drive the stock price to double. Now, while the January surge in GME stock was driven by a short squeeze, the overall short position has dropped meaningfully from as high as 68 million shares in January (vs. total company’s float of 45 million shares) to 11 million currently. However, the value of shorts is still meaningful at around $3 billion, partly explaining the rise in the stock. Though the stock can defy all estimates and move in any direction, we don’t see a significant leg to this rally given the lack of fundamentals. Also, based on our machine learning analysis of trends in the stock price over the last few years, we believe that there is a strong chance of a decline in GME stock over the next month (twenty-one trading days). See our analysis on GameStop Stock Chances of Rise for more details. Curious about the possibility of rising over the next quarter? Check out the GME Stock AI Dashboard: Chances Of Rise And Fall for a variety of scenarios on how GME stock could move.

Five Days: GME 92%, vs. S&P500 3.1%; Outperformed market

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(Extremely rare event)

  • GameStop stock rose 92% over a five-day trading period ending 3/12/2021, compared to broader market (S&P500) rise of 3.1%
  • A change of 92% or more over five trading days is an extremely rare event, which has occurred 20 times out of 2516 in the last ten years

Ten Days: GME 160%, vs. S&P500 3.9%; Outperformed market

(Extremely rare event)

  • GameStop stock rose 160% over the last ten trading days (two weeks), compared to a broader market (S&P500) rise of 3.9%
  • A change of 160% or more over ten trading days is an extremely rare event, which has occurred three times out of 2500 in the last ten years

Twenty-One Days: GME 417%, vs. S&P500 1.3%; Outperformed market

(Extremely rare event)

  • GameStop stock rose 417% the last 21 trading days (one month), compared to broader market (S&P500) rise of 1.3%
  • A change of 417% or more over 21 trading days is an extremely rare event, which has never occurred in the last ten years
While GME stock may see a decline, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Abbott vs. Vertex.

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