Cliffs Natural Resources Inc (CLF), Pitney Bowes Inc. (PBI): The S&P 500’s 5 Most Hated Stocks

GameStop Corp. (NYSE:GME)

Why are investors shorting GameStop?

For years, the bet against GameStop had been made on the presumption that gaming-console makers were taking an eternity to develop a new system. That long evolution cycle, along with the rise of digital gaming and the threat that new gaming consoles would have built-in fail-safes to prevent used games from being played on them, compounded with the rise of streaming digital gaming, was enough to pressure GameStop for many quarters.

Is this short interest warranted?

Lately, though, the pessimism has had less to do with the gaming evolution cycle, which has actually been a boost for GameStop, given that Sony and Microsoft will allow acceptable forms of second-hand game sales. The short interest owes more to the fact that GameStop’s share price has more than doubled since April. GameStop is a cash cow, and expectations are high that the new consoles will sell well, but I can’t help but feel that this could be a case of “buy the rumor, sell the news.” Short-sellers may be getting burned now, but they could be victorious once these new gaming consoles are released.

The article The S&P 500’s 5 Most Hated Stocks originally appeared on Fool.com and is written by Sean Williams.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of GameStop and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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