The stock of video game retailer GameStop (NYSE:GME) is skyrocketing today in an apparent short squeeze, with short-sellers buying up shares in massive quantities to cover the liquidation of their positions. GameStop's shares were up nearly 70% as of 1:54 p.m. EST today.
Short interest in GameStop was noted as being a significant percentage of its total float at the start of this week, and today's explosive stock market movement seems to be a short-seller response to an announced agreement with activist investor RC Ventures.
While GameStop's shares rose approximately 17% in trading Monday, that was dwarfed by today's gains. The company says it will place three candidates advanced by RC Ventures -- Jim Grube, Alan Attal, and Ryan Cohen -- on its board of directors. The appointments are effective immediately, raising the number of directors from 10 to 13.
In a press release, GameStop refers to the appointments as a "refreshment" of the board, asserting that the new appointees "bring deep expertise in e-commerce, online marketing, finance and strategic planning" to its operations. Board chair Kathy Vrabeck added that these skills should "help us accelerate our transformation plans and fully capture the significant growth opportunities ahead for GameStop." The new directors will be eligible for reelection to a reshuffled nine-member board during GameStop's annual meeting in June.
Analysts at Baird echoed Vrabeck's statements, noting that the directors now include three individuals with previous experience at online pet supply seller Chewy (NYSE:CHWY), which has seen outstanding performance during recent quarters, based on the strong success of its e-commerce model.
Baird said that although pet food and video games are very different markets, GameStop as a platform should benefit from the new directors' e-commerce background nevertheless.