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GameStop is expected to lose money this year and next year. Sales growth is sluggish as fewer gamers need to go to stores — or even shop online — when they can download new titles directly from their consoles, PCs, phones or tablets. So why are shares of the video game retailer up more than 275% so far in 2021?

The company can thank a loyal group of investors on Reddit who continue to back the stock even as many others on Wall Street have argued that the shares are overvalued and due for a sharp decline.

The stock was extremely volatile on Monday, and it was halted several times. Shares more than doubled at one point, and finished the day 18% higher.

Posters on the WallStreetBets subreddit have been touting the company aggressively. That appears to have helped fuel a so-called short squeeze in GameStop (GME) stock.

A large number of investors have bet against GameStop recently by borrowing shares and selling them with the hopes that they can then repurchase the stock at a lower price and pocket the difference.

That's a risky strategy: If a stock suddenly spikes higher, short sellers may have to rush en masse to buy back shares or risk losing their shirts.

The more that a shorted stock goes up, the bigger the losses become if a short seller doesn't buy back (or cover) their position. That creates the squeeze.

Citron Research, an investing firm that often identifies stocks it thinks are overvalued and therefore could be good short-selling candidates, has learned the hard way what can happen when investors squeeze a stock higher.

Citron founder Andrew Left called GameStop a "failing mall-based retailer" in a report earlier this month and then predicted that the stock would plunge to $20 in a video he posted to Twitter on Thursday. At the time, GameStop was trading around $40. The stock surged to $65 by Friday and is now trading around $100.

Left has now given up on shorting GameStop, citing harassment by the stock's backers.

He also tweeted last week that "too many people" were hacking Citron's Twitter feed, causing him to delay the posting of his video, which was originally planned for Wednesday. Left was not immediately available for further comment.

The victory for GameStop's vocal bulls on Reddit shows how dangerous it is for investors to bet against stocks that have a significant cult following. BlackBerry (BB), another favorite among Reddit's WSB followers, has also surged this year.

Some gleeful GameStop investors are even looking to cash in by selling merchandise touting the stock rally.

JonesTrading chief market strategist Mike O'Rourke noted in a report Monday that there is now a commemorative patch listed on Etsy that celebrates the GameStop stock spike. More than 100 have been sold so far.

To be sure, GameStop does have some upside beyond the Reddit love.

Despite its name, the retailer doesn't sell only games. GameStop is also popular with fans of pop culture collectibles, such as Star Wars toys and Funko (FNKO) figurines, which help attract shoppers who aren't hardcore gamers to visit the brick and mortar shops.

GameStop announced earlier this month that same-store sales rose nearly 5% during the 2020 holiday season and that digital sales skyrocketed more than 300%.

Overall sales were still down though, due primarily to temporary store closures as a result of a spike in Covid-19 cases in December as well as supply disruptions due to strong demand for new PS5 and Xbox Series X.consoles from Sony (SNE) and Microsoft (MSFT).

GameStop had no comment for this story, but the firm is making some changes as it attempts to become a more digitally-focused retailer.

The company announced earlier this month that Ryan Cohen, founder of online pet supply store Chewy, is now on GameStop's board along with two other former Chewy executives. Cohen's RC Ventures is one of the largest investors in GameStop.

"The three new directors collectively bring deep expertise in e-commerce, online marketing, finance and strategic planning to GameStop," the company said in a press release about the board moves.

Still, some investing experts are worried that the rise in GameStop has gone too far too fast and could be yet another sign of speculative mania in what has suddenly become a frothy overall market.

"Generally speaking, stocks with high short interest have been some of the top performers this year," said analysts at Bespoke Investment Group in a report earlier this month.

The Bespoke report also noted that struggling retailer Bed Bath & Beyond (BBBY), mall owner Macerich (MAC) and hard hit movie theater operator AMC (AMC) are other examples of heavily shorted stocks that are up substantially in 2021.

eptember proved to be a bruising month for the main U.S. equity benchmarks, resulting in the first losing month for Wall Street since a recovery rally began in late March.

However, history suggests that a terrible September, which is historically the worst performing month of the year for U.S. stocks, could be followed by the indexes outperforming despite October usually ranking as the second-worst month of the year.

On Wednesday, the Dow Jones Industrial Average DJIA, +1.19% DJIA, +1.19% ended September with a decline of a 2.3%, the S&P 500 index SPX, +0.82% SPX, +0.82% dropped by about 3.9% for the month, and the Nasdaq Composite Index COMP, +0.74% registered a decline of 5.2%.

The last time any of those main benchmarks posted as ugly a September performance was 2011, during the European sovereign debt crisis and the downgrade of America’s pristine triple-A credit rating by Standard & Poor’s.

However, Dow Jones Market data suggests that the irksome losses that helped to snap the hard-earned monthly win streak from the lows in March, when the coronavirus-sparked decline reached its nadir, doesn’t have to translate into more carnage in October.

In fact, the indexes tend to rise in the following month 70% of the time after losses as severe as September this year, based on the last 10 periods in which the Dow marked a decline of at least 2%, the S&P 500 marked a September slide of at least 3.5%, and the Nasdaq Composite logged a drop in the ninth month of the year of at least 4.5%.

Overall, however, on a percentage basis, the S&P 500 and the Dow have tended to fall on average in October. An important point to note, is that the relatively short data set is skewed to the low side by the punishing declines endured by the market in 2008, when the Dow lost 14.1% in October of 2008, the S&P 500 dropped nearly 17% that month, and the Nasdaq Composite tumbled almost 18%.

Those declines during the financial crisis dragged the overall 2008 performance for the Dow lower, leaving an average loss for the month of October of about 1% and a relatively flat rest of the year at 0.05%. Meanwhile, the S&P 500 has declines of 1.2% and declines of 2.3% for the rest of the year. However, the Nasdaq Composite tends to gain nearly 4% in the October trading period on average and notch a 3.6% advance in the year to date (see attached chart).


To be sure, the road ahead for stocks appears uncertain in 2020, even if investors are clinging to hope for a fresh round of economic stimulus from Washington to combat the ill effects of the coronavirus on business activity.

The 2020 presidential election and the fear that stock prices are exceeding their earnings by increasing margins have fostered concerns of a possible shock to the system that could deliver a more substantive gut punch to Wall Street.

But for now, investors may be hoping for a less-spooky October, if not a less-volatile trading stretch in the lead-up to the Nov. 3 elections.

uropean stocks rose on Monday, after a survey showed a rebound in manufacturing activity across the continent’s leading economies in July as coronavirus lockdowns eased.

Rising demand saw manufacturing activity expanding in the eurozone last month for the first time since January 2019, according to new purchasing managers’ index (PMI) data on Monday.

The headline figure on IHS Markit’s closely watched PMI survey for eurozone manufacturing rose to 51.8 in July. It follows months of plummeting output as COVID-19 wreaked havoc with both supply and demand, though the decline had levelled off in June with a 47.5 reading. Figures above 50 show most firms surveyed are reporting growth.

The final headline figures for national economies came in at 51 in Germany, 52.4 in France, 53.5 in Spain, 51.9 in Italy, and 53.3 in Britain. A measure specifically measuring output also showed a return to growth in July, hitting 55.3, the highest rate of expansion since April 2018.

European stocks had been mixed at the open, but every leading index was trading flat or higher after the figures were released. The pan-European Stoxx 600 (^STOXX) was up 0.4%, and the Stoxx 50 (^STOXX50E) was up 0.7%.

Germany’s DAX (^GDAXI) rose 1.3%, the CAC 40 (^FCHI) in France rose 0.4%, and Britain’s FTSE 100 (^FTSE) was up 0.1%, paring back losses after opening 0.6% lower.

Asian stocks had been mixed overnight. Stocks in Shanghai (000001.SS) rose 1.8% as a private-sector survey showed Chinese factory activity grew at the fastest pace in almost a decade in July.

Japan’s Nikkei (^N225) gained 2.2%, but the Hang Seng (^HSI) index in Hong Kong shed 0.7%.

But gold prices also hit a new record high in Asia overnight, as fears over the course of the coronavirus and global economic recovery boosted demand for the precious metal.

Spot gold briefly hit a record high of $1,984.66 (£1,519.65) in trading overnight in Asia as investors’ jitters boosted the safe-haven asset, before sliding back to around $1,973.75. US gold futures (GC=F) were up 0.2% to $1,989.50 at around 3.30am eastern time in the US (8.30am in London).

It came after alarm over bleak economic data and rising COVID-19 cases in some countries knocked European stocks hard on Thursday and Friday. The gloomy data saw the pan-European Stoxx 600 (^STOXX) ending July 1.1% lower, marking its first monthly decline since markets plummeted in March.

US stocks looked set for a mixed open. S&P 500 futures (ES=F) were trading flat, Dow Jones futures (YM=F) were down 0.2%, and Nasdaq futures (NQ=F) were up 0.4% at around 4am eastern time after strong earnings from US tech giants last week.

Big banks have long held precious objects on behalf of their customers—from jewels in safe-deposit boxes to shares of stock. Now, thanks to a new policy by a federal banking regulator, they will be able to hold cryptocurrencies like Bitcoin too.

The new policy is set out in a letter published on Wednesday by the Office of the Comptroller of the Currency (OCC). The letter, addressed to an unnamed bank, stated that national banks and savings associations can engage in so-called custody services for their clients.

The news is significant because regulatory uncertainty has until now led major banks to avoid Bitcoin. What’s more, the bylaws of many big investment funds, including pension funds, oblige them to park clients’ money only with federally chartered banks. As the research group Coin Center notes, this amounts to a de facto ban on cryptocurrency.

The upshot is that big banks now have a green light to open crypto operations. If they do, they will likely begin by focusing on custody services, which until now have been the purview of crypto-focused companies like Coinbase and BitGo.

Custody is important in the world of crypto since currencies like Bitcoin are entirely digital, making them easy to steal. Being a custodian entails storing the so-called private key that provides access to a given digital wallet.

As the OCC notes in its letter, banks already offer to safeguard other digital items on behalf of their clients. This includes offering “secure web-based document storage, retrieval, and collaboration of documents and files containing personal information.”

Custody of cryptocurrency also has the potential to be a lucrative line of business, given that the market cap of Bitcoin is around $170 billion, and that custodians typically charge fees of around 0.25% to keep it safe.

The OCC letter also opens the door for banks to offer more exotic services such as “staking”—a form of proxy voting for certain cryptocurrencies—and crypto lending. Such activity is tiny in the context of the broader financial system, but has become increasingly important in the crypto industry.

All of this raises the question of whether banks will seek to build their own cryptocurrency divisions or seek to acquire some of the numerous crypto startups in the U.S.

In the meantime, one influential crypto entrepreneur, Barry Silbert—who runs the large conglomerate called Digital Currency Group—took to Twitter to express his pleasure with Wednesday’s development.

I'm looking forward to getting my ass kissed by all the banks now

— Barry Silbert (@barrysilbert) July 22, 2020

US stocks slipped on Wednesday, ending a three-day S&P 500 winning streak.

The decline comes amid spikes in confirmed COVID-19 cases in several areas in the US, stoking concerns over a potential second-wave shutdown.

But the news wasn't all negative. Data released on Wednesday morning showed that mortgage applications surged 4% last week and were up 21% from the year-ago period, indicating a strong bounce-back for the housing market and US consumers.

Here's where US indexes stood at the 4 p.m. ET market close on Wednesday:

• S&P 500: 3,113.49, down 0.4%
• Dow Jones industrial average: 26,119.61, down 0.7% (170 points)
• Nasdaq composite: 9,910.53, up 0.2%

The two positive readings follow homebuilder sentiment was reported jumping in June at a record pace. New home sales and construction will likely increase in the coming months and solidify a remarkable bounce-back for the sector, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said.

"In short, the housing market is on track for the fastest and most complete recovery of any sector in the economy," he said.

Federal Reserve Chair Jerome Powell spoke to House lawmakers Wednesday afternoon, revealing plans to slowly shift the central bank's corporate-credit purchases from exchange-traded funds to individual bonds. The targeted purchases are "a better tool for supporting liquidity and market functioning," Powell said.

Soaring tech names led the Nasdaq composite to outperform its peers. Apple climbed to an intraday record after RBC Capital Markets upgraded its price target to imply an 11% gain over the next year. The firm's analyst praised the tech giant's share repurchase program, saying Apple "remains in a league of its own."

Oil traded slightly lower on Wednesday after tearing higher on Tuesday. West Texas Intermediate crude fell as much as 3.1%, to $37.21 per barrel, before paring some losses. Brent crude, the international benchmark, sank 2.3%, to $40.03 per barrel, at intraday lows.

The mild gain followed a 527-point increase for the Dow on Tuesday, driven by the retail-sales beat and a Bloomberg report that said the White House was considering a $1 trillion infrastructure initiative. Popular so-called reopening stocks, including American Airlines, Carnival Cruises, and Gap, swung higher as investors maintained hopes that a full reopening would arrive soon.

Retail-sales data released Tuesday also propped up investor optimism. Spending leaped 17.7% in May, more than double economists' consensus estimate, serving as another sign of the V-shaped rebound that investors are seeking.

Generation Z, defined as customers born between 1996 and 2010, hold up to $143 billion in spending power, but haven't yet developed brand loyalties that dictate where they store and spend that money.

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For banking and payments providers, attracting these customers while they're young could lead to lucrative relationships throughout their lives, with value increasing as they age, earn more money, and expand the number of financial products they engage with.

Most Gen Zers haven't started using financial products beyond a bank account, which makes them a ripe opportunity for players in the space.

As a result, many firms target millennials and Gen Zers together in a push to attract younger customers, but this could be limiting their ability to effectively capture the interest of tweens, teens, and young adults, because Gen Z differs from their older counterparts. As a group, they're more responsive to influence from friends and peers than they are to traditional advertising, less likely to remember life before the internet, and more open to a wider variety of financial service providers than other consumers.

Understanding what makes Gen Zers tick is critical for marketers, strategists, and developers looking to cater to these younger customers and build out a suite of products, tools, and services that they'll want to adopt. In this report, Business Insider Intelligence will use a six-point framework — developed based on industry research and conversations — to explain the core attributes that Gen Z values in a product.

It will then explain how each of these attributes can be applied to banking and payments products, and offer actionable recommendations, strategies, and examples for how to implement them to grab younger customers ahead of the competition.

The companies mentioned in the report are: Affirm, American Express, Apple, Bank of America, Capital One, Citi, Current, Discover, Instagram, Google, Grab, Greenlight, JPMorgan Chase, Mastercard, PayPal, Uber, Venmo, Visa, Wells Fargo, Zelle.

Here are some key takeaways from the report:

• Gen Z's lack of financial services product adoption offers providers a long runway for growth. While two-thirds of Gen Zers have a bank account, many don't yet use debit cards, haven't aged into credit cards or loans, and aren't responsible for the bulk of their own spending. As they navigate life transitions, like going to college or getting a first job, there's ripe opportunity for providers to engage these customers.


• Gen Z is more interested in digital payments products and services than any other generation. While adoption of mobile wallets has been tepid among the general population and P2P apps, like Venmo and Zelle, are just now gaining traction among older users, Gen Zers are diving in head first: Over half use digital wallets monthly, and over three-quarters use other digital payment apps or P2P apps in the same time frame.


• To attract, engage, and retain Gen Zers, financial services firms must develop products that are social, authentic, digital-native, and educational, offer value, and evolve over time. This combination, which emphasizes key attributes that Gen Zers value, serve as a roadmap for developing offerings with features that appeal to these users in both the short and long run.

In full, the report:

• Explains why Generation Z represents a meaningful and urgent opportunity for financial services providers.


• Outlines a six-point framework for building services that can attract, engage, and retain Gen Zers.


• Offers specific strategies that banks and payments providers can implement to build products tailored to this generation.


• Evaluates examples of tactics that work in bringing Gen Zers into the fold and turning them into lifelong customers.