GameStop Just Ripped 35% in a Month: Are Ryan Cohen’s Insider Purchases Your Buy Signal?

Insiders at GameStop (NYSE:GME | GME Price Prediction) spent the past month buying the company’s shares on the open market, and the filings recorded no sales at all. GameStop stock trades at $25.63, up 35% over that stretch, a run that left the rest of the video game industry well behind.

Meanwhile, Take-Two Interactive (NASDAQ:TTWO) stock fell 6% over the month, heading the opposite way from GameStop stock. Roblox (NYSE:RBLX) shares rose 7%, a modest advance by comparison.

Also, the VanEck Video Gaming and eSports ETF (NASDAQ:ESPO), which counts GameStop, Take-Two and Roblox among its holdings, rose 2% over the month. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) gained less than 1%. With both the gaming fund and the broad market barely moving, the rally in GameStop shares rested on the company’s own story.

Cohen and Four Directors Bought Into Strength

Securities and Exchange Commission Form 4 filings showed that every insider transaction recorded at GameStop over the past month was an open-market purchase. Ryan Cohen, the company’s chairman, president and chief executive officer, was the largest buyer, and his biggest single purchase in the window was 700,000 shares in early October. Directors Nat Turner, Alain Attal, James Grube and Lawrence Cheng bought alongside him over the same stretch.

Cohen and the directors paid steadily higher prices as the month went on, from below $19 per share in the earliest GameStop trades to above $24 on Cohen’s early October buy. That pattern showed the insiders repeatedly buying into strength as GameStop stock rose. Each purchase locked in a costlier entry than the last, a choice that reflected conviction about the company.

Why Cohen’s Purchases Earn a Qualified No

Cohen’s purchases offer only a qualified signal about GameStop. Cluster insider buying with no matching sales was a genuine signal, because Cohen and the directors faced no obligation to act and committed their own money at rising prices.

What the signal leaves out is timing and a price. Form 4 filings disclose insider trades after they happen, and by the time the GameStop filings were public, the move they accompanied had already run a long way. A buyer following the insiders into GameStop stock at $25.63 would spend more per share than Cohen paid on his 700,000-share purchase in early October.

What to Watch Next

Shareholders can watch for whether GameStop’s next reported results follow the insider buying, since purchases establish belief and only reported numbers can confirm value, so the company’s own figures may carry more weight than any further Form 4 filing. Strong figures would back the insiders’ read on GameStop, while soft ones could leave the month’s gain exposed.

Investors should adjust their holdings carefully, given that GME stock has already climbed 35% in a single month and traded above the prices insiders paid. Because GameStop stock moved apart from Take-Two, Roblox and the gaming fund, your exposure to the name carries company-specific risk that your broader gaming holdings may not offset.

The insider record gave GameStop a real show of confidence from the people closest to the business. The filings came out after much of the run. Your share positions in GME stock should reflect that the next move will likely depend on what the company reports.

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