It looks like it is not game over for GameStop (NYSE:GME). Shares of the popular stock closed higher Wednesday by more than 100%, and are adding another 20% in after-hours trading. So what is behind the spike in GME stock? And what else do you need to know?
To start, the biggest piece of news appears to be that GameStop CFO Jim Bell will resign on March 26. According to many familiar with the deal, this comes as the company works to execute its turnaround strategy. Remember, Chewy (NYSE:CHWY) founder Ryan Cohen is flexing his muscles as an activist investor. After his recent posting to the board, it seems he is using that new influence to shake up the C-Suite. Now, analysts think Cohen will use the opening to recruit someone with more experience in tech or e-commerce.
This makes sense. Although much of the rally in GME stock came as the result of a retail investor-fueled short squeeze, there were also legitimate hopes for a turnaround. Cohen said that GameStop could one day rival Amazon (NASDAQ:AMZN) with a better e-commerce business. His comments sparked hopes for direct-to-consumer sales and a more technologically savvy business.
Are there other possible catalysts? Perhaps. Social media users are one again sounding the alarm on a short squeeze. This makes sense, following bold predictions from the likes of Mark Cuban. In various ask-me-anything sessions, Cuban said he thought there was great short squeeze potential in the future. He also reminded retail investors of their power, and encouraged them to keep trading.
It would make sense for investors to check out on particular forum for more information on GME stock… However, it turns out that forum is also down this afternoon.
Reddit Crashes as GME Stock Soars
Right after the closing bell, Reddit acknowledged via its social media accounts that it is having issues with its desktop and mobile experience for customers. The site RedditStatus.com reported major issues for both types of customers, but now says Reddit has identified the underlying problem. Along with this, it says the systems are starting to recover.
Investigating: We are currently investigating this issue. https://t.co/PLZPIXJTT8
— reddit status (@redditstatus) February 24, 2021
So what do you need to know? The Reddit crash had the r/WallStreetBets crowd fired up. Keep a close eye on the social media platform and on GME stock. Maybe we will see another wave of the Reddit stocks rally in the coming days.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.