GameStop (GME) remains among one of the most disliked stocks on Wall Street with roughly one-third of available shares held by short sellers. But that hasn’t stopped shares from leaping 60% in 2013 in spite of the negativity.
A big reason for the rally has been those short sellers getting “squeezed” out, forcing them to buy back shares to cover their bets. But there also has been favorable news — for instance, reports from PlayStation and (eventually) Xbox that their newest consoles would support used games — a business crucial to the success of GME.
GameStop remains a very tenuous play in 2013, an era when players can download many games direct to their consoles and when many tablets and smartphones have replaced TV-centric gaming. And even if you need a disc to put in your PlayStation, why go to GameStop instead of ordering online?
But those bigger headwinds made so many people bet against the stock last year – and set the bar so low that GameStop has managed to stage a dramatic rally over the last few months.