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Esports Entertainment Soars After Citron Says GameStop Should Buy It

A deal would allow GameStop 'to pivot away from its secularly declining retail business and monetize its customer database,' Citron said.
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Esports Entertainment  (GMBL)  shares soared Thursday after Citron Research said gaming retailer and meme-stock GameStop  (GME)  could benefit from buying the esports entertainment and gambling platform.

“There is one way for GME to seamlessly both pivot away from its secularly declining retail business and monetize its customer database, and that answer is to acquire Esports Entertainment Group,” Citron Research analysts wrote in a commentary, according to Bloomberg. “An acquirer could easily pay $50 to acquire GMBL.”

Esports Entertainment recently traded at $22.11, up 25.8%. It has skyrocketed 295% over the past year, as many people stuck at home because of the Covid pandemic have turned to internet gambling to fend off boredom. Interest in video games also has surged, with homebodies locked to their screens.

GameStop has been on a rollercoaster ride since late January. A positive feedback loop on chatroom platform Reddit first sent it soaring. And since then it has moved down, up and all around, as market sentiment shifts back and forth between fear and greed.

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On Thursday, the stock was again up a huge amount, possibly because of options activity. The stock recently traded at $133.04, up 45.1%, after more than doubling in trading yesterday. Over the past year, it has surged an astronomical 3,468%. That compares to a 24% gain for the S&P 500 and a 50% increase for the Nasdaq Composite.

On Wednesday, GameStop announced that Chief Financial Officer Jim Bell will depart with a payout worth nearly $30 million, after less than two years on the job. Bell will get $15.8 million when he departs, and could earn millions more from equity in coming years if activist investor Ryan Cohen can pull off a turnaround of GameStop.