GameStop – Time to Sell? What the Experts Say
Is GameStop (NYSE: GME) stock on its way down for good? This is the question many retail investors are asking themselves as they ponder their losses on paper this week. In the month of January, stocks for the struggling retail video game chain rose from under $20 at the beginning of the month up to a 52-week high of $483, sparked by a short squeeze and a group of amateur investors on a message board subthread: Reddit/WallStreetBets.
Some buyers who got into the game early — even before the stock became famous — cashed in to make hundreds or hundreds of thousands. One Missouri man turned his $4,500 into a cool million, although, as of last Friday, he hadn’t sold the stock, according to Wichita news site KWCH12.
Redditor r/DeepF*ckingValue (be warned — full screen name posted below) reportedly turned his $54,000 buy into $48 million on paper as of last Wednesday, but he is one of the leading members of the r/WallStreetBets Reddit message board intent on “holding the line.” As of Monday evening, it was unclear whether he’d cashed out some, all or none of his stocks.
Described as “very smart and very humble” by fans and fellow Redditors in WSB, the 31-year-old financial educator, whose real name is Keith Gill, could not be reached for comment by major news media sites including The New York Times. One Redditor said, “We need to support him should he want privacy. We need to respect him should he exit his position.”
If DFV does cash out, (or has already) he’s likely to keep quiet so as to prevent an army of WSB Redditors from following him, devaluing the stock and giving those who still hold a short position profits — and bragging rights. The entire GameStop saga has become about so much more than profits. For those who are holding to make a statement against Wall Street short sellers, no loss is too big.
But for those who are in it to make money — and not just a statement — should they get out now?
On Friday, after the stock had hit a high of $413 for the day and closed at $325, investment expert Jim Cramer advised selling: “Take the home run. You’ve already won,” Motley Fool reported.
Similarly, Motley Fool writer Chuck Saletta wrote: “The worst mistake GameStop investors can make right now is to assume the party will continue.”
Motley Fool, which normally touts a long-term investment strategy, points out the shortcomings of GameStop’s business model, including a 30% fall in overall sales in the third-quarter year-over-year and a 25% fall in comparable store sales.
If you were one of the lucky ones to get in on the game early, it may be wise to take your profits and roll them into a well-diversified portfolio for long-term holding.
If you purchased in the midst of GameStop mania banking on the stock to go “to the moon” as hordes of Redditors proclaimed, the right call is anybody’s guess. You might cut your losses. Or hold on and hope that GameStop CEO George Sherman can, as Chewy co-founder and GameStop investor Ryan Cohen implored last year in a public letter to the board of directors, revitalize the company into an online powerhouse and a “technology company that delights gamers and delivers exceptional digital experiences.”
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