That sharp move higher pushed the specialty retailer's stock into positive territory year to date after having declined by more than 50% earlier in 2020.
The rally, which has continued into early September, came following news that a large institutional investor is actively buying the stock and has already accumulated nearly 10% of GameStop's outstanding shares. The stock's jump was likely amplified by short-sellers closing their positions, which can create a large price spike known as a "short squeeze."
The new shareholder may use its influence to agitate for a management shake-up, but that's not a sure bet. In the meantime, investors will be watching GameStop's upcoming earnings report, which is set for Sept. 9. That announcement should show improving -- but still sharply negative -- sales trends in the fiscal second quarter.
GameStop is aiming to stay profitable in fiscal 2020, which would be an impressive achievement given widespread temporary store closures tied to the COVID-19 pandemic. The bigger question is whether the retailer can return to a consistent growth profile as consumers reduce shopping trips and the stampede toward digital game purchasing continues.