The GameStop share price rebounded heavily on Tuesday as the recovery season continued. GME stock rose by over 30% in the regular session and an additional 16% in extended hours. It is trading at $143, which is the highest it has been since January this year. The shares have also risen by more than 85% from the lowest point this year.
GME stock rebounds
GameStop is a company that came into the spotlight in the first quarter of 2021 as it became a favourite among traders in forums like StockTwits and Reddit. At the time, the shares moved from about $30 to more than $400, making it one of the leading companies in the United States. This is although the company operates in a declining industry where people are shifting to game streaming, There is also an ongoing chip shortage that has made consoles relatively rare.
As a result, the GameStop stock price collapsed from over $400 to a low of about $74 this year. Investors were concerned about the company’s growth prospects and the fact that liquidity in the market is starting to dry as the Fed boosts rates. Further, the amount of cash moving around in 2021 is no longer around because of the lack of stimulus.
The GME share price jumped sharply as insider transactions helped boost confidence among investors. Ryan Cohen, who is also the founder of Chewy, announced that he had bought 100k shares. He paid between $96.81 and $102.82, meaning that he now owns about 11% of the company. The share purchases happened even after the company surprised investors with a big loss even as its revenue jumped to $2.5 billion.
Insider purchases are usually a sign of confidence in the company. That’s because they tend to send a signal that these insiders know some things that other people are not aware about. A potential catalyst for the GameStop share price will be its investments in digital products.
GameStop share price forecast
Turning to the daily chart, we see that the GME stock price has been on a roller-coaster in the past few months. It has lost more than 70% of its value from its highest level on record. A closer look shows that it may have hit important support at about $80.99. It is also slightly below the 25-day and 50-day moving averages.
Therefore, there is a likelihood that the GameStop stock price will continue rising as bulls target the next key resistance level at $160. This view will be invalidated if it moves below the support at $100.