GameStop stock price (NYSE: GME ) dropped by 6 percent in yesterday’s trading session, reversing a bullish trend that had resulted in its value surging by more than 15 percent year-to-date. The continued recovery in the markets comes two years after the company’s parabolic rise caught Wall Street by surprise after retail users noticed that the company had been undervalued and they could take advantage of its price mismatch to drive its stock price high.
During the sporadic rise of GameStop two years ago, Wall Street investors were pitted against retail investors in what became viewed by many as a class war. For the first time, Wall Street traders were on the losing side against retail investors, with many hedge funds getting forced to cover short positions, whereas small Reddit-inspired investors saw their assets surge in price.
What Next for GameStop Stock Price
Now, two years down the line, the GameStop stock price is rallying again, which has resulted in optimism from its investors. The prevailing market conditions, such as the decreasing inflation rate and the possibility of the Fed rate hikes stopping, are also having an impact on the markets.
Most of its investors, who two years ago were slow to jump out of their investments when the trend started to come down and have continued holding the stock in hopes of it recovering, are also contributing to its recovery.
For instance, in 2022, whereas large companies such as Tesla (69 percent drop), Meta (64 percent drop), and Nvidia (51 percent) lost big in the markets, GameStop’s decline was small, partly due to its retail investors not selling amidst a strong bearish market trend.
There is also a high likelihood that the company’s last financial report may bode well with its investors in 2023. In its third-quarter report, the company announced a minimal decrease in SG&A (sales, general, and administrative expenses) of $387.9 million, compared to $421.5 million. They also reported a cash flow for the first time, which was $177.3 million. All these factors will likely play a significant role in GameStop’s continued recovery in the markets.
GameStop Stock Price Forecast
Despite dropping by 6 percent in yesterday’s trading session, the company’s long-term trend and price action have been aggressively bullish. Therefore, I expect to see a continuation of the bullish trend.
There is a high likelihood we might see the company trading above the $30 price level in the coming sessions. My long-term view is for a continued bullish trend in the first two-quarters of the years.