Shares for GameStop, the struggling video game retailer, increased by nearly 2000% at the end of January as a result of an amateur trading group organized on Reddit. GameStop shares that were previously traded at about $18 skyrocketed to nearly $350 on the 27th of January. 

     The Reddit group of amateur investors now consists of over 3 million members. Not only has GameStop’s shares wildly inflated; AMC Entertainment, American Airlines and even smartphone maker BlackBerry have been fueled by enthusiastic amateurs. 

        Like many retailers, GameStop has suffered due to the coronavirus pandemic, which only worsened the already declining demand for games due to online sales and alternatives. Despite this lack of value, GameStop has become one of the hottest stocks of the year. 

    Last April, when GameStop announced numerous closures, shares could be bought for about $3.25 each. Such an event has proven to be costly for professional financiers.

      While it is too early to say how long the rise of GameStop will continue, analysts suggest that both sides will face some hard lessons. Erika Safran at Safran Wealth Advisors states, “I think the millennials will temporarily be rewarded, and a short-squeeze is definitely conceivable. The stock can get pushed up so that at some point the short-sellers will fold and make the stock go higher. Eventually, it may trend down to the fundamentals of what a stock like this is willing to accept.”

       Eugene Liebel, business educator at North Harford High School says, “I think what the Wallstreet online forum did was fine, they were organizing a bunch of people to trade in the same way to try and make money.” He adds  he doesn’t see anything wrong with that, “especially given the fact that sell offs/purchases by major fund managers has a similar impact and that happens all the time.”

       As for the future of the stock market Liebel mentions, “My biggest fear is that this so-called meme investing becomes a trend, and people buy stock simply because of forums and social media campaigns,” said the educator.  He adds that is not investing, that is day trading. “It’s basically gambling. I would never recommend it, it’s mostly a losing proposition. You have seen in the last week GameStop start to drop quickly in value, because the bottom line is that they are still a struggling company.”

        February 1 GameStop shares lost nearly a third of their previous value following a 400% short-squeeze the previous week. Robinhood and other trading apps continue to limit buying of GameStop stocks, along with a variety of other shorted names. Currently the trading app Robinhood only allows clients to purchase 20 GameStop shares, unless they already own 20 shares.