GameStop shares doubled on Wednesday with most of the gains coming in the last hour of trading. The rally carried over into after hours trading, with the stock up another 70% in the extended session. The cause of the move is up for debate.
The rally is a sudden return of volatility for GameStop shares, which surged in late January. At Wednesday’s close of $91.71, the stock is still down 74% from its closing high of $347.51 on Jan. 27. Wednesday’s 104% gain was the stock’s largest percent increase since Jan. 27, according to Dow Jones Market Data.
Nearly 51 million shares changed hands Wednesday, the stock’s highest volume since Feb. 5, when 81.3 million shares were traded.
On Tuesday, GameStop announced that its Chief Financial Officer Jim Bell was stepping down next month. A person familiar with the matter told Barron’s that Bell was pushed out, as the company looks for a candidate to help its transformation into an e-commerce focused retailer.
Telsey Advisory Group analyst Joseph Feldman wrote that the hunt for a new CFO could bring in “a top talent who has deep understanding of digital and aligns with GameStop’s recently refreshed board’s financial and strategic approach.”
Still, Feldman has an Underperform rating on the stock with a $33 price target. “We believe the company has yet to show financial and execution success in an industry that is rapidly shifting to digital,” he wrote. “Importantly, we believe the current valuation levels exceeds our high fundamental expectations and projected multi-year benefits from the transformation.”
Jefferies analyst Stephanie Wissink has a Hold rating but a $15 price target. She thinks GameStop will look for a CFO with a more extensive technology background, “which will be a signal of the direction the company is due to take in coming years.”
But the CFO announcement was Tuesday’s news, and the stock initially fell in after-hours trading following the announcement. GameStop’s surge began nearly 24 hours later, with the rally picking up steam after 3 p.m. ET Wednesday. The stock was hotly discussed on Reddit’s WallStreetBets forum, according to a site that tracks ticker mentions. But that’s been the case for weeks.
Chewy co-founder Ryan Cohen posted on Twitter for the first time since GameStop stock captured the nation’s attention. But the tweet was cryptic. It included a photo of a McDonald’s ice cream cone, with a frog emoji caption. What that means is anyone’s guess, though on Twitter speculation ran rampant. A representative declined to make Cohen available for comment Wednesday.
GameStop stock remains tied to the short selling interest and speculative options activity that colored the stock’s January moves, making it difficult to interpret the stock’s action. Still, it’s probably safe to say the volatility will continue in the coming weeks.
Write to Connor Smith at [email protected]