Why GameStop Is Heading Lower Today

What happened

Shares of GameStop (NYSE:GME) were trending 2.6% lower in morning trading Friday, following a week of vacillation by traders in the video game retailer. Just like yesterday’s bump higher, there was no company-specific news to account for GameStop’s lower stock price today.

However, there were behind-the-scenes developments at video game companies that could potentially weigh on the retailer.

Person playing video game in a store.

Image source: Getty Images.

So what

Video game behemoth Activision Blizzard (NASDAQ:ATVI) is embroiled in a sexual-harassment and toxic-workplace imbroglio, but three top designers of some of the game developer’s most important titles, including Diablo and World of Warcraft, are no longer with the company. Their separation from the company is reportedly related to the fallout surrounding the lawsuit and recriminations against the company.

While that doesn’t impact GameStop directly, the retailer is transitioning to an e-commerce-oriented business model. And those two games, which have massive online support, might be indefinitely delayed and could cause negative sentiment to swell around its stock.

Now what

GameStop was one of the original meme stocks, so its shares are going to be volatile regardless of whether there’s news or not. It also becomes harder for the traders who populate internet chat rooms to maintain their positions in the video game stock for extended periods of time, regardless of all the exhortations to have “diamond hands” or “HODL!” (hold on for dear life).

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With other meme stocks garnering more support, like AMC Entertainment, or making a big splash when going public, such as Robinhood Markets, the temptation to sell and move onto a more exciting issue may be too great to resist.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/08/13/why-gamestop-is-heading-lower-today/

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