Insider Buying

GameStop Insiders Buy Resulting in Yet Another Short Squeeze

A stonewalled GameStop store at the corner of a busy street displays posters of multiple games on glass windows

Meme Stocks, as the name implies, are stocks that have gained a cult status thanks to multiple netizens vouching for them across platforms. Very likely to be the first meme stock, GameStop Corp. (GME: US), saw its price hiking in early January 2021, when it closed at a value of $347.51 on January 27, 2021. 

Presently GME is still an extremely shorted stock, but with two recent cases of insider buying, the stock price has shot up. 

Cohen Returns With High Profile Trade

Ryan Cohen was once the CEO and forever the founder of Chewy Inc (CHWY: US), a pet food supplier company that was covered earlier by 2iQ Research for its own short selling.

Back in 2020, Cohen first bought GME stock on two occasions: December 17 and 18. These insider buys were of a total of 1,226,400 shares and worth a net value of approx. $19 M. This was followed by GameStop’s price rise mentioned above. Cohen himself later joined GameStop as Chairman, and this also propelled share prices higher at the time. 

Currently, it appears as though that history is repeating itself. In March 2022, Cohen made another bulky insider trade but this time was joined by fellow insiders at GameStop: 

  • Prior to Cohen’s buy, Lawrence ‘Larry’ Cheng - a Director at the company -  purchased 4,000 shares worth roughly $383,000 on March 21, 2022. Cheng also took to Twitter to announce his insider buy. 
  • Chairman of the Board, Ryan Cohen, spent almost $10.1 M on 100,000 shares of GME on March 22, 2022.
  • Another Insider who followed the Chairman’s suit was Alain ‘Alan’ Attal, a Director, who purchased 1,500 shares for a value of approx. $195,000 of GameStop stock.

The chart shows price of GameStop stock over the last year, with significant buys and sell events highlighted

Cohen’s trade was also mentioned in a CNBC report which named GameStop as one of the stocks that were moving the most pre-market. 

Shorting Still Ongoing 

Despite the bullish signals it gave in the past, GameStop is still in the Short selling zone of the stock market.

From February 7, 2022 to March 22, 2022, GameStop’s utilization rate was at a full 100%. As of March 23, 2022, GME has almost 21.6 M shares on loan. Compared to the start of 2022, when GameStop had around 10.5 M shares on loan, this number is almost 106.1% higher.

Table shows the short selling metrics of GameStop Corp, including utilization rate and shares on loan

Price Surge Strikes Again

GameStop’s shares kicked off 2022 at a closing price of $152.84, a price that gradually fell. The lowest value of GME this year was $78.11 its closing price on March 14, 2022. 

The same day as Cohen’s insider buy, GME opened at $95.40. It later ended the session with a closing price of $123.14, signifying a price increase of almost 29.1% in a single day

The next day, GameStop went as high as $150.93 before closing on $141. This price surge of nearly 14.5% has sent investors, and particularly GME following online into a frenzy. A recent Reddit post also revealed that GameStop has more shareholders than the big guns of the current S&P 500: Apple, Microsoft, and Google. Additionally, GameStop also has plans to turn itself into an NFT marketplace. This was taken a step further when GameStop took their marketplace live, powered by Loopring L2. 

As of yet, GME continues to be the stock that is defying short-sellers expectations. Only time will tell how much longer it will continue to surprise investors. 

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