Investors who have owned stocks since 2016 have generally made big gains. In fact, the SPDR S&P 500 (NYSE: SPY) total return over the past five years is 110.5%. But there is no doubt that some major stocks have outperformed others over time.
GameStop rises: A stock that has seemingly risen from the dead and become one of the best investments of the past five years is a video game store GameStop Corp. (NYSE: GME).
Like other brick-and-mortar retailers, GameStop was livelihood before the 2020 pandemic. From the beginning of 2016 to 2020, the lagging 12-month sales decreased by 21.6%. In 2018, GameStop reported a 3% drop in revenue and a net loss of $ 673 million. In the most recent quarter, GameStop’s revenue declined 30.1% on a net loss of $ 18.8 million.
In early 2016, GameStop shares were trading around $ 27. Over the next three years, the stock declined steadily as online video game sales shifted more and more.
Sales picked up in 2019 and GameStop finally came in at $ 3.15 in early fall 2019.
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GameStop in 2021, beyond: GameStop rebounded to $ 6.92 in late 2019, before the COVID-19 pandemic sell-off, which brought its stock back to $ 2.57 in March. Fortunately for GameStop investors, the stock got a major catalyst in August 2020 then Chewy Inc. (NYSE: CHWY) founder Ryan Cohen took a 9% stake in GameStop.
By the end of 2020, GameStop shares were back above $ 10, drawing the attention of the Reddit WallStreetBets trading community. WallStreetBets recognized the opportunity that GameStop’s large short interest created, and they used a gamma squeeze in the options market to trigger an institutional investor’s short squeeze to send GameStop shares “to the moon,” or on its own. least as high as $ 483.
GameStop investors who bought and held their lottery ticket during a historically volatile five-year period made a significant profit. In fact, $ 1,000 worth of GameStop stock purchased in 2016 would be worth about $ 16,100 today, assuming dividends reinvested.
Looking ahead, analysts expect GameStop’s journey to the moon to be a tour expedition. The average price target of the nine analysts examining the stock is $ 12.50, which indicates 94.9% down from current levels.
(Photo via BentleyMall on Wikipedia.)
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