With the advent of nihilistic internet posts foreboding the beginning of a new worldwide recession, why is it that Gamestop’s (GME) stock continues to rise?
While western markets followed a downward trend last month, with the Dow falling by an astonishing 1000 points, and the S&P 500 falling by about 2.2 percentage points; Gamestop’s stock remained comparatively stagnant, slipping from a starting value of $25.22 to its current price of $22.50. How can that be? Perhaps the better question is, was this market hysteria all just a pointless panic?
See, while the Dow did in fact fall 1000 points last month with the S&P following suit, markets rebounded the following week. Both indexes reclaimed their prior evaluations and the general public moved on; the hype fizzled out. The rallying cry behind Gamestop stock, particularly during the years of the pandemic, was to stick it to the gargantuan financial institutions who had been shorting underperforming stocks for decades as a way of lining their own pockets. As the evaluation of the prices began to soar, internet investors began to proclaim a new era of financial freedom was upon them; until investment platform, Robinhood, which was used by most of these investors, stopped allowing them to buy more Gamestop stock, that is. At the height of the bubble, GME stock was evaluated at $81.25 per share. Not even a week later, that price had already plummeted to $15.94.
The problem with snap movements in the market is that they exaggerate the state of our current economic climate by over-emphasizing outliers. When those same outliers are reported dutifully by outlets simply wanting a piece for a 24-hour news cycle, readers get so caught up in the headlines that they often forget to look at the bigger picture, promoting paranoia amongst the general public.
