Chuck Bentley Answers: Can You Explain the GameStop Frenzy?

Dear Chuck,

Can you explain what happened with the GameStop fiasco this week? It is very confusing to understand why it was such big news. 

Shocked by GameStop 

Dear Shocked by GameStop,

Like you, I was stunned by the hysteria to own shares of this seemingly small, struggling retailer called GameStop. It was certainly never one on my personal radar as a choice investment opportunity.

The saga of what happened as the stock soared from $40/share until it peaked at $468/share within one week will go down in the annals of Wall Street history. It turned out to be the biggest “short squeeze” in the past 25 years.

To explain it simply, an angry mob of small day-traders decided to try to injure the largest hedge fund on Wall Street. It was the classic “little guy vs. big guy” fight. Billions of dollars were lost (by most everyone involved) as this extraordinary event unfolded.

My understanding is that a box-office movie is already being planned to showcase what some are calling an uprising of “the ants vs. the elephant” in a life or death battle.

There is a lot to learn from this incredible story, especially in regards to the biblical principles of investing.

Some Background

GameStop bills itself as the world’s largest retail gaming destination for Xbox, One X, PlayStation 4, and Nintendo Switch games, systems, consoles, and accessories. They also sell gamer-centric apparel, collectibles, and more. However, the company was clearly struggling. They once operated nearly 6,000 stores worldwide, but the move to online gaming was hurting the company badly. They closed 600 stores in 2019, and by September of 2020, they announced they would be closing another 450 stores due to the strain placed on the company by COVID. The publicly traded stock under the symbol GME fell to $4-$7/share during that time.

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SOURCE: Christian Post, Chuck Bentley

Chuck Bentley is CEO of Crown Financial Ministries, the largest Christian financial ministry in the world, founded by the late Larry Burkett. He is the host of a daily radio broadcast, My MoneyLife, featured on more than 1,000 Christian Music and Talk stations in the U.S., and author of his most recent book, Money Problems, Marriage Solutions. Be sure to follow Crown on Facebook.

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