GameStop (GME) shorts have been ridiculously squeezed.
Over the last few days, the gaming stock exploded from $20 to a high of $159.18 on a massive volume spike of 105.9 million shares, as compared to average volume of 18.9 million.
Two key announcements may be contributing to the rally.
For one, the company announced a 309% surge in holiday e-commerce sales.
On January 11, the company reported worldwide sales results for the nine-week holiday period ended January 2, 2021 reflecting a 4.8% increase in comparable store sales and a 309% increase in E-Commerce sales.
George Sherman, GameStop’s chief executive officer said, “GameStop maintained its status as the omni-channel destination for gaming and entertainment with unprecedented demand for the new gaming consoles and a significant increase in E-Commerce sales. Demand for the new generation of consoles remains very strong, and as a result, we anticipate the consumer’s excitement for the new console technology will benefit us going forward well through 2021.”
Two, the founder and former CEO of Chewy, Ryan Cohen is joining the GME board of directors. Reportedly, he’s expected to help strengthen GameStop’s e-commerce and tech capabilities.
However, don’t be so quick to jump on the FOMO bandwagon here.
Short squeezes like this don’t last forever. The stock has become insanely overbought well above its upper Bollinger Band (2,20), with over-extensions on RSI, MACD, and Williams’ %R. Before long, it could come down as fast as it went up.