Shares of GameStop soared again yesterday, hitting $490 premarket Thursday. (Shares sold for $40 last week.) I will not offer any financial advice. I never do. But for those who are curious about the unusual increase in share prices, consider this.
Information asymmetry is the fundamental principle underlying every transaction. Depending on their respective investment strategies, both buyer and seller believe that they have more information than the other, and that they will enjoy a positive return on their investment. If you’re thinking about buying, what do you know that the sellers don’t?
This story gets more interesting because GameStop has been a hot topic in the WallStreetBets subreddit. The results of this informational pressure on GameStop share prices is well documented and worth a look.
BTW, this extreme speculative behavior is not limited to GameStop. AMC was up 300% on Wednesday and Bed Bath & Beyond was up 75% this week, though both were down a bit premarket Thursday. Is this behavior an anomaly or a trend? As always, I welcome your thoughts.
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Author’s note: This is not a sponsored post. I am the author of this article and it expresses my own opinions. I am not, nor is my company, receiving compensation for it. I am not a financial advisor. Nothing in this article should be considered financial advice. If you are considering any type of investment you should conduct your own research and, if necessary, seek the advice of a licensed financial advisor.