Stocks of Gamestop Fall 12% After Last Week's Surge

GameStop Corp. witnessed a significant drop of 12.8% in its shares on Monday, following a sudden surge in the past two trading sessions without any apparent catalyst.

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The videogame retailer, renowned as an original meme stock, experienced a remarkable upswing last week, concluding Friday's session with a notable 29.1% increase, marking its largest daily percentage gain in over a year. This surge came after the stock rose by 17% during Thursday's session, breaking a three-day losing streak, evoking memories of the meme-stock frenzy of 2021, which propelled GameStop and AMC Entertainment Holdings Inc. shares to extraordinary heights.

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Stocktwits, a social-media platform frequented by stock investors and traders, pointed out that GameStop had surged by 35% since a user known as @ACInvestorBlog highlighted it on April 25.

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According to the latest exchange data, short interest in GameStop accounts for 22.5% of its public float of shares. The decline in GameStop shares occurred amidst trading volume of 16.44 million shares, significantly surpassing its average 65-day trading volume of 4.66 million shares.

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In an effort to enhance profitability, GameStop announced in March its decision to reduce its workforce. However, the company fell short of analysts' expectations in both revenue and earnings in its recent fourth-quarter results, prompting Wedbush, an analyst firm, to caution about the possibility of its demise before the decade's end.

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In December, GameStop's board of directors approved a revised investment policy, allowing the company to invest in equity securities and other financial instruments. The board entrusted Ryan Cohen, the Chairman and Chief Executive Officer, with the responsibility of managing the investment portfolio.

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In its latest annual report filed with the U.S. Securities and Exchange Commission, GameStop disclosed revisions to its investment policy, stating that the board had delegated authority to an investment committee, comprised of the chairman, Ryan Cohen, and two independent board members, to oversee the company's securities investments.

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Cohen recently expressed the company's interest in recruiting individuals with expertise in retail, supply chain management, and software engineering.

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In the year 2024, GameStop shares have witnessed an 18.3% decline, in stark contrast to AMC's 47.8% drop and the S&P 500 index's gain of 8.1%.

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