Why Is GameStop Stock Surging Tuesday?

GameStop Corp. (NYSE:GME) stock surged Tuesday after Chairman and CEO Ryan Cohen bought another 1.15 million shares of the video game retailer.

According to an SEC Form 4 filing released Monday, Cohen purchased 1,150,680 shares of GameStop Class A common stock at a weighted average price of $22.9375. The trades ranged from $22.76 to $23.02 per share, putting the total investment at roughly $26.4 million.

The purchase lifted Cohen’s personal stake above 40 million shares. Meanwhile, Nasdaq futures were little changed Tuesday, while S&P 500 futures gained 0.09%.

The buy extends a run of insider accumulation that began earlier this month. Cohen picked up one million shares on Sept. 10 at an average near $20.38, roughly a $20.4 million ticket, and three directors — Lawrence Cheng, James Grube and Alain Attal — added shares in the same week. 

Technical Analysis

GameStop is trading above its 20-day simple moving average of $19.91, 50-day SMA of $20.11, 100-day SMA of $21.23 and 200-day SMA of $22.19.

That setup gives bulls control of the near-term trend. However, the 50-day SMA remains below the 200-day SMA. That bearish “death cross” formed in June and continues to weigh on the longer-term technical picture.

Momentum has also become stretched. GameStop’s relative strength index stands at 75.91. An RSI above 70 is generally viewed as overbought and can signal a higher risk of a pullback or consolidation.

Traders may watch $25.50 as key resistance. On the downside, $21 is a key support area. That level sits near the 100-day SMA of $21.23 and the 100-day exponential moving average of $21.01.

GameStop remains down 15.01% over the past 12 months. Its 52-week range is $17.79 to $28.10. As a result, a move toward $25.50 would still leave the stock below its yearly high.

Benzinga Edge Rankings

The Benzinga Edge scorecard shows a mixed setup for GameStop.

Its Momentum score is 28.45, which ranks as weak despite the latest rally. Its Value score is 70.06, while its Growth score is 88.33.

The scores point to stronger growth and value characteristics, while momentum remains the weaker factor.

Top ETF Exposure

The VanEck Social Sentiment ETF (ARCA) holds GameStop at a 3.43% weighting. The Texas Capital Texas Equity Index ETF (ARCA) has a 2.49% weighting.

Flows into or out of those funds can create additional buying or selling pressure in GameStop shares.

Price Action

GME Stock Price Activity: GameStop shares were up 4.13% at $23.70 in Tuesday’s premarket trading, according to Benzinga Pro data.

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