What Is The Next GameStop Stock?

GameStop stock’s recent volatility was a wild ride. Shares opened the year under $20, then went sharply, shockingly high over a few days in late January. The peak was about $483 per share, but that didn’t last long. Within a week, prices dropped to about $63 each. 

Retail investors drove the steep incline through no-fee, no-commission apps like Robinhood. Small traders got excited about the stock through the WallStreetBets discussion group on Reddit, and the chatter rapidly spread through other social media platforms.

Soon, novice investors downloaded the Robinhood app and made their very first trades, hoping to get in on what appeared to be a sure thing. 

Why Did GameStop Stock Go Up? 

GameStop got a boost from the influx of retail investors, but there was another phenomenon in play that created the extraordinary peak.

Some of the more sophisticated WallStreetBets traders noticed that massive hedge funds had significant short positions in GameStop – and they were running out of time to cover those positions. 

As hedge funds bought GameStop shares to close out their short positions, the activity pushed the stock’s prices even higher. Everyone involved knew the high prices would be short-lived, and retail investors started looking for opportunities to repeat their GameStop success. 

Some pushed AMC as the next GameStop stock. Others encouraged the purchase of silver and related assets. Another group – led by Tesla’s Elon Musk – was confident that the cryptocurrency Dogecoin would be next to deliver exceptional returns.

Meanwhile, many market experts said this was an exceptional event that is unlikely to be repeated. 

So, what is the next GameStop stock? Or are the experts right in saying that retail investors won’t “get lucky” again? 

Will AMC Stock Go Up? 

As GameStock shares started trending downward, AMC Entertainment caught the eye of retail investors.

First, the company announced it was able to secure enough funding to keep it afloat for most of 2021, then some of the WallStreetBets traders noticed that shares were heavily shorted. 

In an effort to create another “short squeeze” and force prices up by making hedge funds pay premium prices on shorted shares, AMC was heavily promoted across social media platforms.

While shares did go up significantly for a few days, it wasn’t anything close to the rise of GameStop stock. At its highest, AMC only hit $20.36 before trending down again. 

The perfect storm that created the GameStop buying frenzy didn’t reoccur with AMC. While AMC stock may go up once consumers are ready to see movies again, there is no indication that AMC is a smart buy. 

Is Silver A Good Investment?

Some retail traders in search of the next GameStop stock set their sights on silver. During the first week of February, they pushed silver prices up about seven percent, but again, the increase was only temporary. 

The strategy was similar to the one behind GameStop – silver-related assets had been shorted by professional investors.

WallStreetBets and its followers hoped to push the price up, forcing professionals to buy in at higher prices when closing out their short positions.

The success of this plan relies on the fact that there is a finite amount of physical silver available for purchase. If demand for physical silver increases and supply is limited, prices will go up. 

However, one of the issues with this strategy is that “silver” isn’t a precise term – especially for inexperienced investors. Activity was diluted due in part to the fact that retail investors purchased shares in a wide variety of silver-related assets.

For example, Gatos Silver went up by 82 percent in a single day, causing a temporary pause in trading. Within hours, it was back down to its original price.  

Meanwhile, the Global X Silver Miners ETF got a lot of attention, and companies like Argent Minerals, Boab Metals, Pan American Silver, Hecla Mining, SSR Mining, Silvercorp Metals, Fortuna Silver Mines, and Wheaton Precious Metals saw a bump.

While these companies might eventually see gains as a result of a shortage of physical silver, buying these shares doesn’t contribute to the overall “short squeeze” strategy. 

Despite the confusion over what to buy, silver coins and other forms of physical metal saw a lot of activity. It is true that an upswing in buying may deliver returns at some point. After all, silver-related investments are generally a smart buy as part of an otherwise well-diversified portfolio.

However, there is no indication that silver will experience the same meteoric rise as GameStop, despite retail investor interest. In fact, it is currently considered a relatively risky choice, given its recent volatility. 

Is Dogecoin a Good Buy? 

Finally, the cryptocurrency Dogecoin has been top of mind for retail investors in search of the next GameStop stock.

While it got its start as something of a joke in the fintech community, Dogecoin is gaining legitimacy. Big names like Tesla’s Elon Musk, Kiss’s Gene Simmons, and Rapper Snoop Dogg have promoted Dogecoin through social media, predicting that it is well on its way to a value of $1. 

That $1 value doesn’t sound like much until you consider this: Dogecoin is up 1,600 percent so far in 2021, and its value is just $0.08. If Dogecoin does indeed catch on and see widespread use, a rise to $1 would mean substantial returns for anyone who buys in now. 

With that said, celebrity backers or no celebrity backers, Dogecoin is a very risky investment. Certainly, it could go up and generate impressive returns for investors, but there is no guarantee that it will.

Those interested in speculating should treat a Dogecoin purchase as they would any other high-risk investment – never putting more in than they can afford to lose. 

Indeed while Musk was touting Dogecoin, he was snapping up $1.5bn worth of bitcoin. So buyer beware.

What is the Best Investment for 2021? 

Though a traditional strategy lacks the excitement of GameStop’s dramatic rise and fall, choosing the best investment for 2021 boils down to the basics: careful research into the financial health of a company and its larger industry, examination of coming opportunities and challenges that might impact share prices, and finding a balance between risks and possible rewards that meets the needs of a diversified portfolio.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.