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GameStop is highly likely to go out of business despite the massive spike in stocks – Here’s why

Steam
Valve Corporation

The new spike might make it look like it’s set for life, but the company is not likely to benefit from this

Over the weekend, a GameStop store in Maryland showed the difference between all the craziness happening in Wall Street that has caused the company’s stock price to skyrocket versus the actual struggles it’s still undergoing.

The business was slow but the clerk at the game retail store said that it was the same as usual. After all, GameStop didn’t really have anything to do with what happened to it, except for having low value stock and just got caught in the crossfire over a battle of stock trade ethics and is now forced to sit with it.

How it began

GameStop
Patrick T. Fallon / Bloomberg file photo

It started with a Reddit forum called Wall Street Bets, which has over 2 million members and it’s their active participation that drew up the stocks. The more people buy stocks, the mods its value increases. From the looks of it, Wall Street Bets is gaining collective power – enough to push back hedge funds and analysts who predicted GameStop’s downfall.

But that’s not going to save GameStop. Read on.

Other oppositions

Steam
Valve Corporation

Michael Pachter, Wedbush Securities’ managing director told Insider that what we are seeing is “just a cult phenomenon” and that the company doesn’t have the earning power to support such a high price.

Another major opposition is the internet streamlined shopping for games. PC gamers used to go shop for game CDs at stores like GameStop, but now they won’t have to since digital services like Steam and the Epic Games Store has them buying from home. Consoles are also going the same way.

In conclusion, the stock market chaos of the company has everyone’s attention, but the company is still heading for an inevitable downfall.

GameStop stock explained

 

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Rakesh Pillai

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