GameStop (NYSE: GME) stock fell during intraday trading Wednesday after a Wall Street veteran warned that trading GME stock resembled gambling.
Peter Tuchman, a veteran New York Stock Exchange floor trader, has issued a cautionary note to traders, likening trading GameStop stock to gambling and urging investors, particularly inexperienced ones, to approach it with caution.
Tuchman stated,
“It’s irresponsible for the newcomer into the market to think that this [GameStop trading activity] is anything else except gambling.”
He emphasized that many young traders, enticed by the volatility and past hype surrounding GameStop, risk repeating mistakes that could leave them financially vulnerable.
Tuchman highlighted the speculative nature of GME stock, citing concerns over its volatility and the company’s fundamental challenges. For context, Gamestop reported a 29% year-on-year sales decline in the first quarter and a significant loss of $32.3 million. The company heavily relies on gaming consoles, which constitute over half of its sales, and operates 4,169 physical stores amid a broader industry shift towards digital retail.
GameStop stock has seen substantial volatility recently, declining 52% from its peak of $66 on June 6. However, CEO Ryan Cohen has capitalized on renewed trader interest, raising $2.1 billion by selling 75 million new shares.
Jeff Macke, a retail expert and investor, commented on GameStop’s business model challenges, suggesting that its current strategy doesn’t align with modern retail trends. He stated,
“GameStop stopped making sense from a business perspective a while ago. They’re packed away in the mall where … the newsstand used to be and the shoe polish guy.”
The warning from Tuchman comes amidst ongoing speculation and trading frenzy surrounding GameStop’s stock, influenced by figures like Keith Gill (aka Roaring Kitty) known for advocating GameStop stock investments.
GameStop (NYSE: GME) Stock Reaction
On Wednesday, GME stock declined 2.93%, closing at $24.20, marking a 2.02% decrease for the week. The trading volume was 17,903,022 shares, significantly lower than the average daily volume of 48.86 million.
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