The Short-lived Glory of Gamestop

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We all learned from Einstein that whatever comes up must come down, and, well, that’s what happened to videogame retailer GameStop. The company just wrapped up with its worst week ever with a drop of 84%. Last January 28, the company hit a value of $33.7 billion, and now, it’s dropped to $4.1 billion.

The whole frenzy over Gamestop began on Reddit. In mid-2019, one user who goes by “Roaring Kitty” posted a picture of a $53,000 investment in Gamestop. Some users mocked him for his investment but that didn’t stop him from talking about his investment on social media sites. Eventually, it started garnering more attention and soon other Reddit users started jumping on board. Soon enough, small investors jumped on board, too, and thus, the frenzy over Gamestop began. It was their way of trying to battle against the big guys—hedge funds.

The big frenzy over Gamestop surprised long-time investors because Wall Street giants have been dominating the stock market for a very long time and now newbies were well on their way up the ladder. These young investors were so dedicated to the investment that they frequently discussed financial details in the comments section of Roaring Kitty’s Youtube videos. Roaring Kitty in real life is named Keith Gill and used to work as a financial educator in Massachusetts. In the middle of the frenzy, Gill revealed that is $53,000 investment in Gamestop had exponentially risen to $48 million. That just showed how powerful social media can be when given the right kind of exposure.

Unfortunately, like all things that go viral, they eventually die down. Stocks are already to be volatile and this just proved the fact after the frenzy died down. For now, it is unclear whether Gamestop will continue to rise or go back to how it started before. Gamestop may go up again, but it would be wishful thinking if we expect it to get to $125 in value. If you are one of the young, inexperienced investors who put money in Gamestop, there’s no reason for you to see this through. It’s smarter to cash in what you have now, than wait it out and receive bad news. Use this as a lesson for you to learn from so you can come back more informed and prepared the next time around.