GameStop was launched in 2000 as a small software company in Dallas, Texas. The brand appeared after merging with other companies. Since 2014, the market for physical video game media started shrinking, as digital distribution services such as Xbox Live, PlayStation Network, Nintendo eShop and others, appeared. Since 2017, sales contracted due to reduced traffic, weak gaming industry, and lower prices.
Due to the COVID-19 pandemic, the company closed all its 3,500 stores, relying totally upon online sales. On October 8, 2020, GameStop announced an agreement with Microsoft to migrate server systems to Microsoft 365. In January, GameStop's stock started rising, as the executives from Chewy online store became members of the company's board.
On January 4, GameStop stock was at $17.25. The analysts highlight that the stock started skyrocketing on January 11 after the news on appointing a co-founder and two ex-executives from Chewy online store to the GameStop's board. Private investors from the Reddit community tried to capitalize on this, thus having to compete againsty professional investors from Wall Street hedge funds, who were shorting. Elon Musk's tweet saying "Gamestonk!" with a link to Reddit just added fuel to the fire: the jokes combines GameStop and the famous stock meme Stonk, meaning someone making strange moves in the market hoping to reap quick profits. All this led to high volatility, with GameStop stock price making a high of $496.
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