On January 11, 2021, Gamestop stock surged 50% out of the blue. Yes, Gamestop, the brick and mortar video game store that once had about 7,500 locations globally at its peak in 2016, but closes hundreds of locations every year. And 2021 was no exception, with about 400 closures that year. Its closures get it mentioned in the same breath as struggling retailers like Joann, Forever 21, and Macy’s. So why did its stock suddenly jump 50 percent some random day in a year that it closed 400 stores?
What is Gamestop?
Gamestop isn’t a new company by any stretch. Its roots date back to 1984, and modern-day Gamestop is the result of the merger of several companies, including Babbage’s, Software Etc., Funcoland, and, believe it or not, VA Linux. Selling software is a big business, but digital distribution has taken a big bite out of the retail side of it. Publishers like the lower overhead and higher profits. They also like how it cuts out the possibility of selling used games.
Gamestop can stay afloat by selling consoles and accessories. The problem is, so can any other store. Where Gamestop can have a bit of an advantage is by carrying both new and used consoles and accessories, and potentially having a larger selection than a non-specialty retailer. But there’s little doubt they don’t need 7,500 locations anymore.
By mid 2025, Gamestop had 2,157 locations. If it keeps closing 400 locations per year, it doesn’t take a math genius to see they won’t have any stores left by 2030.
The perfect storm for Gamestop stock
Gamestop looks like the kind of stock that’s more likely to lose value suddenly than gain it. And there’s a way to take advantage of that kind of situation. You can borrow some shares of the stock, sell them, then buy the shares back and return them. If the stock price dropped in between the transactions, you turn a profit. This is called short selling.
Gamestop was a popular target for short selling. On January 22, 2021, 140 percent of the available publicly held Gamestop stock had been sold short. This means some of the shares had been lent and sold short more than once.
Meanwhile, members of the Reddit sub r/wallstreetbets had been buying Gamestop stock, hoping to force some of the short sellers to have to buy the stock and drive the price up, not down.
The stock did indeed surge. It increased 50 percent on January 11 but it wasn’t done. It peaked on January 28, 2021, at one point breaking the $500 mark. Its all-time low was $2.57, reached in April 2020.
This phenomenon of online traders betting is called a stonk, and the target is called a meme stock.
The short squeeze cost short sellers a total of $6 billion.
In 2025, Gamestop stock generally traded at between $21 and $36 per share.
David Farquhar is a computer security professional, entrepreneur, and author. He has written professionally about computers since 1991, so he was writing about retro computers when they were still new. He has been working in IT professionally since 1994 and has specialized in vulnerability management since 2013. He holds Security+ and CISSP certifications. Today he blogs five times a week, mostly about retro computers and retro gaming covering the time period from 1975 to 2000.