By Ben Furgang | February 17, 2021
Tyler Ross couldn’t help but notice that video game retailer GameStop’s stock prices had moved up a considerable amount since he’d last checked. At first, he didn’t know why. As a member of the UAlbany stock exchange club and a sophomore in the financial analyst honors program, he paid close attention to the market. It was clear to him that the company was in a bad financial situation.
But in late January, as he watched the stock continue to climb, he heard about the social media campaign by small traders like himself who were trying to drive up the stock value of struggling companies like GameStop and the movie theater chain, AMC. Thinking he was seeing a trend, he bought six shares of GameStop at $75 on Jan. 25. Then, he sold them on Jan. 29 when the stock hit $325.
“I just followed the trend,” Ross said. “I made a pretty decent profit.”
Ross is one of an untold number of small traders who turned a profit in the recent surge in GameStop’s stock price, which hit a record high of $483 on Jan. 28 after hovering around the $20 mark for the first half of January. Their profits are in stark contrast to the huge losses suffered by hedge funds and others on Wall Street who were not expecting such a spike in price.
“This is honestly one of the most interesting things to happen in the world of finance since the inception of the stock market,” said Hudson Hoffman, a junior at UAlbany and the portfolio manager for the stock exchange club.
Hoffman said he bought stock in GameStop as well, albeit a bit later than Ross. By the time he decided to put some money in, on Jan. 28, it was almost too late.
“I held for not even a day. It was incredibly volatile,” Hoffman said. “I didn’t lose any money, but I know a lot of people who are still holding, and I feel very bad for them.”
Ross stressed how bad of an investment GameStop would be in the long-term. The movement to push up the price, which had been coordinated over Reddit, is now slowing down and prices have been falling. As of Feb. 16, the price for a share of GameStop was $49.51 per share.
Although many people made a profit off the GameStop surge, the high stock price in no way changed the company’s dismal financial prospects. “Their company lost tons of revenue from this coronavirus pandemic,” Ross said. “They’ve been hit hard.”
While things have returned to normal for the most part, this has without a doubt been a watershed moment for the stock market.
“What really made this so interesting, and what allowed GameStop to go the way it did, was the amount of press coverage it got,” Hoffman said. “It’d be hard to pull off something like this again.”