“This is for making us work on Thanksgiving night all the way through black friday at 9.50 an hour,” another user wrote on Reddit . What’s going on with GameStop’s stock doesn’t make sense to a lot of people. To fund the $125 million acquisition, Troika turned to Blue Torch Capital, a direct lender specializing in micro-cap companies. For investors unfamiliar with Troika and TRKA stock, here’s a quick summary. Luke Lango believes an event scheduled for mid-September is set to trigger a massive market shock, potentially defining the winners and losers for the rest of the year.
Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. Shares of AMC Entertainment Holdings (AMC), another meme favorite, were also rising late Friday. A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance.
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They are piling into stocks with high short interest – in other words, companies where many shares are being used to bet against the stock – with the intention of setting off a short squeeze. The meme stock trading frenzy has suddenly sprung back to life, with shares in GameStop (GME) and AMC Entertainment Holdings (AMC) blasting higher thanks to … well, let’s call it speculative enthusiasm on social media. Other heavily shorted stocks have been seeing a surge of interest recently as investors look for the next Trend trading GameStop. American Airlines, BlackBerry and other formerly downtrodden stocks have had extreme swings in price this week. Meme stocks tend to prompt consternation and confusion among normie market participants, but then that’s just part of the fun.
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“Roaring Kitty” is back, and meme stock investors are once again the beneficiaries. Get a brief on what are treasury yields and why do they matter the top business stories of the week, plus CEO interviews, market updates, tech and money news that matters to you. Analysts said GameStop may continue to rise in the short term but they noted differences in the trade this time around and sounded alarm about the risk of sustaining losses if others unload the stock first.
GameStop, based in Grapevine, Texas, sells video games at more than 5,000 stores, and the pandemic has been keeping customers away. More worrisome is the long-term shift by customers away from brick-and-mortar stores and toward buying games online. Tom Yeung is a market analyst and portfolio manager of the Omnia Portfolio, the highest-tier subscription at InvestorPlace. He is the former editor of Tom Yeung’s Profit & Protection, a free e-letter about investing to profit in good times and protecting gains during the bad.
The Motley Fool has no position in any of the stocks mentioned. GameStop earlier this week also announced the launch of its digital wallet for holding non-fungible tokens (NFTs) and cryptocurrency, as part of its plan to transform into a much more digitally driven company. The GameStop frenzy may have quieted down, but according to Goldman Sachs, the retail trading boom could happen again soon. Kiplinger is part of Future plc, an international media group and leading digital publisher.
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From a trading perspective, Troika Media had around 21 million shares sold short at the end of February, a 72% short interest ratio. That’s roughly the same as GameStop’s elevated 88% figure in January 2021. Both firms would go on to experience short squeezes in their stock, an essential ingredient to getting retail investors excited. The stock hasn’t moved higher this week until today, so perhaps the new wallet offering is catching investor interest, although it’s likely more related to the buzz about short interest and the cost to borrow shares.
While it’s technically true that meme stocks offer the remote possibility of earning penny-stock-like returns, they mostly seem to function as a source of nihilistic belly laughs for a select community of day traders. At the same time, champions of the 99% are cheering louder from the sidelines, saying the moves mean that hedge funds, Wall Street and the 1% are finally getting their comeuppance. My initial assessment of Troika assumed that the firm would act in good faith to keep investors updated about its outsized Series E deal. A Schedule 13D or 8-K filing should have notified shareholders of any significant exercise, since the dilutive effect would be 1) a material event, 2) a 5% or more change in ownership, or 3) both. Instead, it took until March 7 for the firm to retroactively announce in its annual report that its share count had risen over five-fold. In GameStop’s case, activist investor Ryan Cohen promised a corporate overhaul to refocus the retailer on e-commerce and other non-mall-based activities.
- The rising short interest has also significantly increased the cost to borrow shares, which is typically done in the practice of short-selling.
- As GameStop’s short sellers have gotten squeezed this month, smaller and first-time investors have been egging each other on to to keep the momentum going.
- GameStop is the pioneer of the meme-stock movement that took 2021 by storm, so the stock is heavily susceptible to big random moves up and down.
- Investors see Ryan Cohen helping GameStop’s digital transformation.
A cheap share price, the retention of Jeffries and the recent short squeeze all seem like a repeat of GME in 2021. Troika’s forward EV/EBITDA ratio sits at 3.1X, a figure usually only seen in private-market transactions. Even I once put a $4.70 pre-dilution value on the company.
The volume of shares being traded had risen to 5.26 million as of this writing, with recent volume averaging about 3.8 million shares. “The past 25 years have witnessed a number of sharp short squeezes in the U.S. equity market, but none as extreme as has occurred recently,” Kostin wrote in the note, published on January 29. “In the last three months, a basket containing the 50 Russell 3000 stocks with market caps above $1 billion and the largest short interest as a share of float has rallied by 98%.” Either way, it appears the retail raiding hordes are back.
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Analysts who spoke with ABC News said the price movement resembles the previous frenzy centered on GameStop and AMC, saying it may once again deliver returns for some investors. However, they cautioned, investors face considerable risk if the momentum peters out before they sell their shares. A big reason for that is how deeply hated GameStop’s stock was by hedge funds and other professional investors on Wall Street. Many were betting on GameStop’s stock to fall by “shorting” it. Enthusiasm has grown for GameStop’s prospects after the company said earlier this month that a co-founder of Chewy, the online seller of pet supplies, was joining its board.
For a brief moment, it seemed as if GameStop could relive its glory bitcoin price chart shows bull fatigue as analyst sees rising wedge days of growth… whether in Web3 gaming or non-fungible tokens (NFTs). And as for Troika, the Converge merger would turn negative profits into positive ones as soon as merger costs flowed through. The one that’s important in this story is called wallstreetbets. More than four million people are in it, usually discussing stocks and shares and where they’re going to invest money. In 2021, the surge in trading was driven in part by investors’ attempt to achieve a short squeeze. Under that scenario, investors drive a sudden spike in the price, forcing a surge of additional share purchases from others who want to cover their previous bet that the price would fall.
