Is the GameStop (NYSE:GME) share price about to go in full retreat?

The GameStop share price fell 2.4% yesterday. But with COVID vaccines rolling out, this could be the beginning of a bigger retreat.

| More on:
A businessman holds his glasses in concern, indicating uncertainly in the ASX share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The GameStop Corp. (NYSE: GME) share price fell 2.4% yesterday (overnight Aussie time).

While the ASX was shuttered for the long Easter weekend, US stock exchanges remained open. GameStop closed the day at US$186.95 per share. That gives the video game retailer a market cap of US$13.1billion.

Despite some recent selling action, GameStop shares are still up an eye-popping 984% so far in 2021.

What drove GameStop's meteoric rise?

As you most likely know, GameStop has the so-called Reddit army to thank for its skyrocketing shares. That's the loosely connected group of retail investors employing social media apps like WallStreetBets to synchronise their investment plans.

Not that every Reddit army recruit has banked those kinds of gains. Anyone who bought GameStop shares at the 27 January highs is currently nursing a 46% loss on their investment.

But that could be just the beginning of a longer, harder slide for GameStop and other 'meme stocks'.

How COVID vaccines could torpedo the GameStop share price

GameStop and other so-called meme stocks are widely believed to have benefited from the global pandemic. That's because the virus saw people forced to remain at home. This gave them extra time to explore the share market opportunities right when many found their bank accounts flush with government stimulus cheques even as they were unable to spend money on their normal pursuits.

But all that looks set to change. And the implications for shares like GameStop could be dire.

According to Bloomberg:

An index that tracks 37 of the most popular meme stocks – 37 of the 50 that Robinhood Markets banned clients from trading during the height of the frenzy – is essentially unchanged over the past two months after soaring nearly 150% in January.

As vaccines begin to take the teeth out of the coronavirus and the world reopens, this trend could well accelerate as people turn away from their day trading apps and towards the activities and work places they were accustomed to.

Edward Moya is a senior market analyst at Oanda. According to Moya:

The stimulus check impact on retail trading is waning. Many Americans are looking to go big on attending sporting events, traveling across the country, vacationing, visiting family and friends, and revamping wardrobes before going out to restaurants, pubs and returning to the office.

While Moya's forecast could prove bad news for the share price of meme stocks like GameStop, it could open new opportunities in areas like ASX travel and retail shares.

Happy investing.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors started the week off in a good mood today.

Read more »

A cute young girl with curly hair sips a glass of milk through a straw with a smile on her face.
Broker Notes

Up 37% this year, why Macquarie expects A2 Milk shares to keep outperforming

Macquarie remains bullish on A2 Milk shares heading into 2026. Let’s see why.

Read more »

Woman and man calculating a dividend yield.
Share Market News

Big week for markets: Here's what to watch

Tech earnings, rate speculation, and Aussie inflation data could shake markets this week — but long-term investors should keep their…

Read more »

ASX shares Business man marking buy on board and underlining it
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

dissapointed man at falling share price
Share Fallers

Why Boss Energy, Elsight, Pilbara Minerals, and Whitehaven Coal shares are falling today

These shares are starting the week in the red. But why?

Read more »

An older female ASX investor holds a gangster-style fist pump pose showing off gold rings with dollar signs on them.
Broker Notes

Why Macquarie forecasts Northern Star shares are set to surge 55%

Macquarie believes Northern Star shares are well-placed to rocket higher.

Read more »

A group of people gathered around a laptop computer with various expressions of interest, concern and surprise on their faces. All are wearing glasses.
Share Market News

ASX 200 tech stock near record high, is it still a buy?

This company's soaring share price and rising profits are turning heads.

Read more »

Excited couple celebrating success while looking at smartphone.
Share Gainers

Why Bellevue Gold, Bubs, Clarity Pharmaceuticals, and Regal Partners shares are rising today

These shares are starting the week on a positive note.

Read more »