GameStop saga ends. Winner: capital markets

Game over. Remember meme-stock craze? GameStop’s shareholders certainly do. video-gaming retailer was on “brink of bankruptcy,” according to former boss Matt Furlong. Yet it was able to raise cash in 2021 via share sales after day trers mobilized by message-board Reddit decided that betting against company was a moral outrage. Two years, a new CEO and a lot of money later, company is roughly back where it started. That’s unfortunate for mob who tried to bail it out, and company itself. But it shows that markets are working as y should.

It is, of course, unnerving that cost of this lesson will be borne by retail trers. GameStop was swept up in a wave of newfound popularity for tring at home, as lockdowns kept people in front of computers and unmonitored by employers. Momentum fueled runs in AMC Entertainment and Bed, Bath and Beyond, too, not to mention a slew of initial public offerings of companies that h no profit.

day-tring crowd succeeded in one part of its mission: giving GameStop a fighting chance. By end of 2021, retailer h nearly tripled its cash hoard, at time roughly a third size of its market capitalization. Activist investor Ryan Cohen, who founded pet retailer Chewy, took over corner office.

But last week, company turned in anor quarter of decline, which one analyst dubbed unsustainable. Its stock price has tumbled far from hey days of meme-stock boom: H an investor spent $1,000 on shares at top, ir stock would be worth about $185 now. In anor lifetime, GameStop might have used its cash warchest to reinvent stores, creating gaming destinations, say. But it didn’t.