GameStop soars after swinging to profit
STORY: Shares of GameStop jumped nearly 50% in morning trading Wednesday after the video game retailer posted its first profitable quarter in two years.
This squeezed bearish investors and ignited a surge in other stocks popular among retail investors.
AMC Entertainment rose 5% while Bed, Bath and Beyond climbed 7%.
The three stocks were at the heart of a meme stocks frenzy in 2021 driven by small investors coordinating on social media.
GameStop also said costs declined 16% in the quarter. Investors saw this as an early sign of a turnaround for the company whose core business of selling new and pre-owned video game disks is shrinking as consumers move to downloading games digitally or streaming.
There is still a lot of skepticism on Wall Street though.
An analyst at Wedbush raised his price target to $6.50 per share from $5.30 pointing to the lower cost structure which he said would reduce the risk of ongoing losses. But that is well below where it currently trades.
Meanwhile, a portfolio manager tells Reuters he expects the company to be irrelevant in the next few years.