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Why GameStop Is Heading Lower Today

By Rich Duprey – Aug 13, 2021 at 11:20AM

Key Points

  • GameStop was the original meme stock, so it will be volatile.
  • Troubles at Activision Blizzard could be sending negative vibes the retailer's way.
  • There could be other more exciting opportunities available to stock traders.

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The video game retailer may be seeing turbulence related to broader industry concerns.

What happened

Shares of GameStop (GME 1.23%) were trending 2.6% lower in morning trading Friday, following a week of vacillation by traders in the video game retailer. Just like yesterday's bump higher, there was no company-specific news to account for GameStop's lower stock price today.

However, there were behind-the-scenes developments at video game companies that could potentially weigh on the retailer.

Person playing video game in a store.

Image source: Getty Images.

So what

Video game behemoth Activision Blizzard (ATVI -0.51%) is embroiled in a sexual-harassment and toxic-workplace imbroglio, but three top designers of some of the game developer's most important titles, including Diablo and World of Warcraft, are no longer with the company. Their separation from the company is reportedly related to the fallout surrounding the lawsuit and recriminations against the company.

While that doesn't impact GameStop directly, the retailer is transitioning to an e-commerce-oriented business model. And those two games, which have massive online support, might be indefinitely delayed and could cause negative sentiment to swell around its stock.

Now what

GameStop was one of the original meme stocks, so its shares are going to be volatile regardless of whether there's news or not. It also becomes harder for the traders who populate internet chat rooms to maintain their positions in the video game stock for extended periods of time, regardless of all the exhortations to have "diamond hands" or "HODL!" (hold on for dear life).

With other meme stocks garnering more support, like AMC Entertainment, or making a big splash when going public, such as Robinhood Markets, the temptation to sell and move onto a more exciting issue may be too great to resist.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Activision Blizzard. The Motley Fool has a disclosure policy.

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Stocks Mentioned

GameStop Stock Quote
GameStop
GME
$25.60 (1.23%) $0.31
AMC Entertainment Holdings Stock Quote
AMC Entertainment Holdings
AMC
$7.43 (1.36%) $0.10
Activision Blizzard Stock Quote
Activision Blizzard
ATVI
$74.34 (-0.51%) $0.38
Robinhood Markets, Inc. Stock Quote
Robinhood Markets, Inc.
HOOD
$9.18 (-0.11%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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