- GameStop flagged short squeezes, online chatter, and big investors selling as risks.
- Those are nods to Reddit’s Wall Street Bets forum and “Big Short” investor Michael Burry.
- The retailer also highlighted “extreme” stock volatility unrelated to its operations.
- See more stories on Insider’s business page.
The video-games retailer revamped the “risk factors” section of the report after its shares skyrocketed, plummeted, then soared again this year. A new subsection outlines risks to its stock, warning that its price has been “extremely volatile” and could fluctuate widely due to factors beyond its control.
GameStop listed short squeezes as one potential driver of future volatility. It also flagged a “high degree of media coverage” across “blogs, articles, message boards, and social and other media” as another factor.
The company mentioned not just equity analysts but “other third parties” commenting – perhaps a reference to “Roaring Kitty,” the YouTuber and Wall Street Bets member who shot to fame after making a fortune on the stock.
Moreover, GameStop pointed to “large shareholders exiting” the stock as another risk. It was likely referring to MUST Asset Management’s sale of its entire 5.1% stake, as well as Burry, who championed the stock in 2019, but sold his 2.4% stake last quarter.
GameStop’s bosses underscored the disconnect between their business and its stock price. They also noted that trend is visible elsewhere.
“Stock markets in general and our stock price in particular have recently experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies and our company,” they said.
The executives emphasized the magnitude of the volatility using two examples. GameStop shares traded as high as $US483 ($634) and as low as $US112 ($147) in the space of a single day on January 28. Their price also ranged from $US20 ($26) to $US348 ($457) between January 11 and March 17, with daily trading volumes between 7 million shares and 197 million during that period.
GameStop’s shares remain volatile. They slumped as much as 17% in pre-market trading on Wednesday, after the retailer’s fourth-quarter earnings fell short of Wall Street’s expectations.
Business Insider Emails & Alerts
Site highlights each day to your inbox.