Updated Jan. 13, 2021 4:51 pm ET
Investors who bet that shares of GameStop Corp. GME -0.01% would fall shifted positions Wednesday, sending the struggling videogame retailer’s stock soaring to its highest levels in years.
GameStop shares were up more than 57% to $31.40 on Wednesday, marking a steep climb from a year earlier, when the stock was valued at just $4.61 a share.
That recovery fueled in part by the company’s announcement two days ago that it would add Chewy Inc. co-founder Ryan Cohen and two of his former colleagues to its board created a so-called short squeeze that drove share prices sharply higher, according to some analysts. A short squeeze occurs when traders respond to an increase in price for a stock they bet would drop by purchasing shares in order to avoid losses.
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GameStop gave investors betting on the struggling videogame retailer good news and bad news on Monday. The stock, for now, seems fixed on the former.
The company (ticker: GME) reached a deal with Chewy co-founder Ryan Cohen’s RC Ventures. Cohen, as well as former Chewy executives Alan Attal and Jim Grube, will join the company s board, now at 13 members. Cohen holds 13% of GameStop shares, according to a recent filing with the Securities and Exchange Commission.
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GameStop Will Add Activist Investors to the Board. The Stock Shot Up.
GameStop gave investors betting on the struggling videogame retailer good news and bad news on Monday.
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Ryan Cohen, a co-founder of pet-supplies retailer Chewy, recently bought more GameStop shares through a limited liability company. Gabriela Bhaskar/Bloomberg
Ryan Cohen, a big investor and activist in
GameStop stock, just bought more shares of the videogame retailer.
GameStop (ticker: GME) shares have tripled this year, lifted by sales of next-generation gaming consoles and the prospect of actions by activists, including Cohen. GameStop’s third-quarter earnings, reported earlier this month, were disappointing. The company also said it plans to sell stock through at-the-market offerings, which could dilute the value of existing shares.
RC Ventures, a limited liability company controlled by Cohen, paid $37 million from Dec. 15 through Dec. 18 for 2.5 million more GameStop shares, at a per share average price of $14.80. According to a regulatory filing, Cohen’s RC Ventures now owns nine million GameStop shares, or 12.9