One of the hottest stocks of 2021, GameStop (NYSE:GME) is once again in the spotlight following some insider buying and a return in meme-stock interest. While GME stock has certainly cooled down quite a bit from its peak last year, today’s price action has brought investors back into the green for the year. At the time of writing, GameStop has surged more than 13%, which will mark the 10th consecutive trading day gain, should this massive positive momentum hold.
Much of the momentum GameStop saw last year was tied to a rather incredible short squeeze. Retail investors piled into GME stock, driving short covering, which resulted in a massive spike. Many of these investors have continued to monitor GameStop for some time, with the hopes that another squeeze could be just around the corner.
The recent price action with GameStop suggests perhaps there’s something to this thesis. Amid a broad recovery in the riskiest asset classes, GameStop has taken off. This stock is now positive for the year, marking a move many didn’t see coming.
Let’s dive into what’s behind this momentum right now.
Why Is GME Stock Surging Higher?
As fellow InvestorPlace contributor Eddie Pan noted, much of the recent momentum GameStop has seen is a direct result of some impressive buying pressure. However, this wasn’t the typical retail buying pressure that took shares of GME stock on a nice tear. Rather, investors are focusing on insider buying from GameStop Chairman Ryan Cohen and Director Lawrence Cheng of more than 100,000 shares.
These share purchases totaled more than $10 million. Accordingly, investors looking for companies with management teams that have skin in the game like this move.
Insider buying activity can provide an excellent catalyst for retail investors looking to ride their coattails. These managers know more about the business than the average person. Therefore, they must see things the average person doesn’t with respect to the value of GME stock.
Right now, it appears momentum is only positive for GameStop. However, we’ve seen how volatile this stock can be in the short term. Thus, investors looking to take a bite out of this meme stock should be aware that this ride could come to an abrupt end at any given point.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.