what happened

Shares of Game Stop (GME 8.64%) running 7% higher as of 10:44 am ET Tuesday, on a day when the stock market as a whole is just inching higher. The IS S&P 500 which is only an increase of 33 points, or less than 1% in comparison.

There’s no news to account for the video game retailer’s stock jumping that much higher this morning, and in fact there’s good reason it should be heading lower.

Video players laughing.

Image source: Getty Images.

Doesn’t matter

GameStop, of course, remains a heavily shorted stock, with about 20% of its outstanding shares sold short, giving it a short interest ratio of 7.6 (anything over 7 is considered a lot). It was an even heavier short interest that caused GameStop to become one of the hottest meme stocks on the market last year as Reddit investors fueled a massive push.

However, it has fallen far from those highs and has fallen sharply to around $26 per share, even compared to its recent price run. The high short interest and lingering interest in stock chat rooms make it a volatile stock, the kind that will rise and fall often on good news, bad news, or any news at all.

Now what

The video game industry continues to trend downward from the highs it hit during the early months of the pandemic and its lockdowns. Last Friday NPD analyst Mat Piscatella tweeted that spending on video game content, hardware and accessories in the United States fell 4% in September compared to the year-ago period, or about $4.1 billion. He notes that consumer spending is now down 8% from 2021.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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