GameStop Corp (NYSE:GME) has become a focal point on the trading floor this Tuesday as the company’s stock demonstrates heightened activity, reflecting renewed interest from the investment community. This uptick in attention has been catalyzed largely by substantial purchases from notable stakeholders, which in turn have bolstered investor confidence in the stock.
Foremost among buyers is Michael Burry, who publicly disclosed through a recent Substack post that he has been reinstating a position in GameStop shares. Mr. Burry indicated ownership of GameStop stock and confirmed recent purchases, highlighting his valuation approach that sees the shares trading near one-times tangible book value. Additionally, he expressed support for the long-term capital strategies being implemented by GameStop’s CEO, Ryan Cohen.
Complementing this insider interest, regulatory filings reveal that Lawrence Cheng, a GameStop board member, has acquired 5,000 shares on January 26 for approximately $114,000—a relatively modest investment, yet significant in the context of ongoing insider accumulation efforts. This purchase follows closely on the heels of Mr. Cohen's own significant accumulation phase during the prior week.
Trading volume has surged accordingly, with nearly 12 million shares exchanging hands Tuesday, markedly surpassing the prior average volume of 6.6 million shares as reported by financial data provider Benzinga Pro. The enthusiasm surrounding the stock appears closely tied to Mr. Cohen’s aggressive buyback, wherein he recently procured an additional one million shares at just above $21 each. This acquisition elevates his total holding to approximately 42.1 million shares, representing roughly 9.3% ownership of the company.
Further aligning interests with shareholder value creation, GameStop recently ratified a compensation package that potentially enables Mr. Cohen to earn stock options for up to 171.5 million additional shares contingent on reaching demanding long-term operational milestones. This plan underscores a management commitment to performance-based incentives.
Highlighting the significance of Mr. Burry’s renewed stake, it is noted that he was among the pioneering well-known investors supporting GameStop’s initial turnaround efforts in 2019, advocating for strategic actions such as share repurchases, debt reduction, and operational streamlining. These initiatives contributed foundational elements to the equity's recovery prior to its 2021 surge amid retail investor interest.
From a technical analysis standpoint, GameStop’s shares currently stand 12.2% above their 20-day simple moving average (SMA) and 4.7% above the 100-day SMA, indicating some degree of near-term strength. However, the stock price remains just below the 200-day SMA by 0.8%, a metric often interpreted as a gauge of longer-term trend viability. Over the previous twelve months, GameStop’s stock price has experienced an 11.53% decline, situating it nearer to its one-year high than its low.
Technical momentum indicators present a nuanced picture. The Relative Strength Index (RSI) is presently 71.43, a level commonly regarded as signaling overbought conditions, which could foreshadow a price correction. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator remains above its signal line, reflecting ongoing bullish momentum in spite of potential overextension.
This combination of elevated RSI juxtaposed with bullish MACD introduces mixed momentum signals, suggesting the presence of upward price pressure balanced against caution warranted by possible overvaluation in the near term.
Key resistance for GameStop shares has been identified at $24.50, while support is being observed near the $22.00 price point. At the time of this report, GameStop traded at $24.21, marking a modest 0.79% increase on the trading day, according to Benzinga Pro data.
In view of these developments, market participants are closely monitoring how both insider acquisitions and technical price action will influence the sustainability of GameStop’s stock rally moving forward.