GameStop (NYSE:GME) is the world’s largest video game retailer. A $10,000 investment during the GameStop IPO in 2002 would be worth $83,250 today.
How the largest video game retailer in the world became a meme stock
GameStop (GME), which was founded in 1984, had become the world’s largest video game retailer by 2020. The company sells games, gaming hardware, and other electronic accessories for gaming devices. As the largest brick-and-mortar video gaming retailer, GameStop had opened 5,500 stores around the world by February 2020.
By 2020, however, the ease with which gamers could download their favorite games in online marketplaces meant that GameStop’s revenue was declining. Steam, Xbox Live, and Playstation Network all allow gamers to buy and download nearly any game without having to buy a physical disc. An inability to compete with the convenience of this method meant that GameStop’s total revenue declined by 43.2% between 2016 and 2020.
The GME stock price reflected this decline. Between 2007 and 2020, GME had fallen 95.75%. However, at the beginning of 2021, GME made headlines around the world. Retail investors from the Wall Street Bets subreddit successfully sparked enough buying pressure to initiate a short squeeze for GME. Several major hedge funds were on the losing side of the squeeze, and within the space of 3 weeks, GME rose from $4.58 to $120.89.
GME stock price, November 2019 to January 2021. Image source: TradingView
GME rapidly rose to prominence during this period after it captured attention for the remarkable short squeeze that took place. It was a story of retail versus institutional traders, with retail coming out on top during an unprecedented volatility event. This all took place during a major bubble for the crypto markets, and GME has since been dubbed a ‘meme stock’ — making reference to popular crypto meme coins such as Dogecoin (DOGE) and Shiba Inu (SHIB).
GME 84% down from ATH, remains 1175% up from September 2020
GME finds itself 84% down from its 2021 all-time high. It has become highly volatile since the infamous short squeeze, bouncing 826% and 151% after the initial retrace took place in February 2021.
For the earliest backers of GME, the widespread acclaim the meme stock got during 2021 may have saved their investment. The GameStop IPO was launched in 2002, and GME shares were offered at $18 at this time. By 2020, GME had fallen below $0.70 — this would have been a -95% loss before adjusting for stock splits.
Now, GME is back to parity. The current stock price is $18.75 and, to this day, remains 1175% up from its low in September 2020.
GME all-time price chart. Image source: TradingView
How much would $10,000 invested during the GME IPO be worth today?
A $10,000 investment during the GameStop IPO would have provided 555 shares at the price of $18. The company initiated its first stock split in 2019 at a rate of 2-for-1 and recently had a 4-for-1 stock split in 2022. As a result, an initial $10,000 investment during the IPO would give early backers 4,440 GME shares today.
Those 4,440 shares would be worth $83,250 at the current price of $18.75 — an impressive 832.5% gain!
You can check out how profitable an IPO investment would have been for other major companies by reading the following articles:
Source: https://coincodex.com/article/32071/heres-how-much-a-10000-investment-in-gamestop-stock-nysegme-in-2002-is-worth-today/