GameStop's Profitable Quarter Sends Stock Soaring Like a Casino Jackpot.
GameStop's stock price has been pushed higher by speculators attracted to its lottery-type trading characteristics, despite the company's overvaluation. Stocks with similar characteristics tend to underperform the market, on average. Many of the speculators who propelled GameStop’s stock higher have no interest in the company’s long-term turnaround prospects. A recent study found that a stock acquires lottery-like characteristics because of a feedback loop involving its volatility, investor attention, and social interactions via channels such as social media. Investors should be on their guard as this feedback loop has nothing to do with a stock’s underlying net worth.