GameStop Corp.’s partnership with Sam Bankman-Fried’s FTX US cryptocurrency exchange is fueling a flurry of buying from retail investors who are pumping their bets on popular social media.
(Bloomberg) — GameStop Corp.’s partnership with Sam Bankman-Fried’s FTX US cryptocurrency exchange is fueling a flurry of buying from retail investors who are pumping their bets on popular social media.
Individual investors flocked to the video-game retailer on Thursday, making it the third-most purchased stock on Fidelity’s platform with buy orders outpacing those to sell at a more than two-to-one clip.
The stock closed 7.5% higher with more than 14 million shares changing hands.
Details surrounding the partnership were relatively scarce outside of GameStop saying it wants to introduce more of its customers to FTX’s marketplaces and that it will sell FTX gift cards in some stores.
The retailer reported quarterly results that mostly missed expectations, with net sales falling from the prior year and trailing analyst estimates.
The excitement for retail traders was not shared by Wall Street as analysts urged caution before piling into bets on the meme stock’s turnaround.
Wedbush analysts are “skeptical that the partnership will drive meaningful revenue or profit contribution.” While Jefferies analyst Stephanie Wissink said the retailer’s unclear long-term growth prospects “remain a key source of speculation and debate.”
GameStop is among a group of so-called meme stocks that captivated individual investors armed with no-fee trading apps amid unprecedented monetary and fiscal stimulus.
The mania led retail traders to bet millions on the prospects of heavily-shorted companies as they teamed up using social media platforms like Reddit’s WallStreetBets and popular chatrooms including Stocktwits to fuel massive rallies.
GameStop’s ticker was the number-one trending company on Stocktwits while mentions on WallStreetBets made it the most mentioned over the morning as individuals discussed the FTX partnership.
Even with Thursday’s rally, investors are likely sitting on big losses with GameStop shares down roughly 48% over the past year.
(Updates with closing prices.)
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