GameStop (NYSE: GME) shares rocketed higher in January, driven by an epic short squeeze. At its peak in late January, GameStop stock had jumped 25-fold from its price at the beginning of 2021.
But while a short squeeze can drive a stock to incredible heights, the gains don’t tend to last long. Sooner or later — usually sooner — the stock price reverts to a level more in line with the company’s fundamental prospects. GameStop bulls learned that lesson the hard way last week, as GameStop stock plunged by about 80%, surrendering most (though not all) of its January gains.