GameStop's Stupefying Stock Rise Doesn't Hide Its Reality
NEW YORK (CBSDFW/AP) — Behind GameStop's stock surge is the grim reality that the video game retailer is floundering even as the industry around it is booming.
GameStop's tumble followed a large reduction in short interest on the stock, which measures how many of the company's shares have been borrowed to sell.
The Grapevine-based company was swept up in a battle between big-moneyed hedge funds betting against it and small investors trying to prop it up. That has caused GameStop's share price to soar despite the shaky financials underneath. And even though there are some bright spots, like improving holiday sales and the naming of co-founder Chewy to the board, any reinvention will take take time and may not work.
Many investors fully understand the contradiction between GameStop's stock price and its business fundamentals. But for those who imagine it to be the next Tesla or Amazon, the truth is: It's likely not.
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