GameStop Corp (NYSE:GME) shares are trending on Tuesday after Michael Burry revealed he has been buying the stock, boosting investor confidence.
- GameStop shares are bouncing around. Where is GME stock headed?
Purchases Igniting Renewed Investor Confidence
Michael Burry wrote in a Substack post this week that he has been accumulating GameStop shares again.
“I own GME. I have been buying recently,” Burry said, explaining that he believes the stock is trading near one‑times tangible book value and pointing to CEO Ryan Cohen’s long‑term capital strategy.
Additionally, a new SEC filing also showed that board member Lawrence Cheng purchased 5,000 shares on Jan. 26 for about $114,000, which is a relatively small buy, but one that adds to the broader theme of insider accumulation given Cohen’s own buying spree last week.
Cohen’s Recent Buying
Nearly 12 million shares of GameStop stock have been traded on Tuesday, well above the average of 6.6 million, according to Benzinga Pro. The increased activity reflects renewed enthusiasm around Cohen’s own buying activity. Last week, he picked up one million shares at just over $21 apiece, bringing his stake to roughly 42.1 million shares, or about 9.3% of the company.
GameStop also recently approved a compensation plan that could award Cohen options on up to 171.5 million additional shares if the company hits aggressive long‑term targets.
It’s worth noting that Burry was one of the earliest well‑known investors to back GameStop’s turnaround in 2019, urging the company to repurchase shares, reduce debt and streamline operations, which helped shape the early bull case long before the meme‑stock frenzy of 2021.
Is The Rally Sustainable Or Just A Fad?
GameStop is currently trading 12.2% above its 20-day simple moving average (SMA) and 4.7% above its 100-day SMA, indicating some short-term strength. However, it is 0.8% below its 200-day SMA, suggesting that the longer-term trend may be under pressure. Over the past 12 months, shares have decreased by 11.53%, and they are currently positioned closer to their 52-week highs than lows.
The RSI is at 71.43, indicating that the stock is in overbought territory, which could signal a potential pullback. Meanwhile, the MACD is above the signal line, suggesting bullish momentum despite the overbought condition.
The combination of overbought RSI and bullish MACD indicates mixed momentum, suggesting that while there is some strength, caution may be warranted due to the overbought condition.
- Key Resistance: $24.50
- Key Support: $22.00
GME Price Action: GameStop shares were up 0.79% at $24.21 at the time of publication on Tuesday, according to Benzinga Pro.
Image: Shutterstock
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