The top indexes in the United States were down broadly in mid-morning trading on February 25. However, a handful of “meme stocks” were on the run again. In late January, the investing world was swept up in the reddit-fueled GameStop (NYSE:GME) craze. Its shares fell precipitously in early February, punishing those that bought late into the frenzy. Shares of GameStop were up nearly 50% in mid-morning trading today. What is behind this latest surge?
On Tuesday, Bloomberg News reported that GameStop’s chief financial officer Jim Bell was pushed out to make way for an executive with a vision more in line with Ryan Cohen. Cohen is an activist investor on the board and the co-founder of online pet-food retailer Chewy.com. His addition to the board sparked the big rush to GameStop stock.
The r/WallStreetBets board saw so much traffic that it went down after trading halted. GameStop was not the only “meme stock” to benefit from this social media-powered surge. We saw a handful of the same names putting together a solid mid-week spike. AMC Entertainment, which has suffered mightily in the cinema space during the pandemic, was up 10% in late-morning trading on February 25. Meanwhile, BlackBerry had failed to pick up any significant momentum.
Earlier this month, I’d suggested that investors should look elsewhere in the promising video game space. GameStop has been an amusing roller-coaster ride, but investing on the whims of a social media mob is usually not a recipe for success. More importantly, GameStop is in a tough position as brick-and-mortar retail looks to decline even further in the years ahead. It will need to dramatically reshape its business model to have a chance in this new economy.
I’d also suggested that investors may want to look at Cineplex (TSX:CGX). Canada’s top cinema operator has also struggled mightily during the pandemic. Indeed, movie theatres have barely been able to operate commercially over the past year. Still, shares of Cineplex have climbed 60% in 2021 so far. There are high hopes for a rebound in this industry as the economy reopens.
Cineplex cinemas will reopen in Ottawa and Cornwall this week. Its shareholders can look forward to a further return to regular operations in the weeks and months ahead. A flurry of box office draws that have been delayed have the potential to thrust Cineplex back to normalcy. GameStop’s business, however, does not have high hopes as currently constructed.
Copper Mountain Mining (TSX:CMMC) is a top base metals mining company in Canada. Copper and other commodities have erupted in late 2020 and early 2021. Shares of Copper Mountain Mining have climbed nearly 80% in the year-to-date period. The stock is up almost 500% from the prior year. Instead of betting on “meme stocks” like GameStop, investors can hop on the base metals bull run. This has a good shot to continue into the rest of 2021, as the global economy rebounds.
Speaking of stocks I’d buy over GameStop…
This Tiny TSX Stock Could Be the Next Shopify
One little-known Canadian IPO has doubled in value in a matter of months, and renowned Canadian stock picker Iain Butler sees a potential millionaire-maker in waiting…
Because he thinks this fast-growing company looks a lot like Shopify, a stock Iain officially recommended 3 years ago – before it skyrocketed by 1,211%!
Iain and his team just published a detailed report on this tiny TSX stock. Find out how you can access the NEXT Shopify today!
Fool contributor Ambrose O’Callaghan has no position in any of the stocks mentioned. David Gardner owns shares of GameStop. The Motley Fool recommends BlackBerry, BlackBerry, and CINEPLEX INC.
The post Here We Go Again: Why GameStop Stock Is Soaring Today appeared first on The Motley Fool Canada.
Seize the market opportunities!
Start trading with a reliable broker.
Let an expert help you get started!
The Motley Fool Canada
Seize the market opportunities today! Start trading with a safe and reliable broker.
Let's help you get started!