Listen up, meme-stock traders! Video game retailer GameStop (NYSE:GME) is preparing to overhaul the company’s loyalty rewards program. This is a smart move that could bolster GameStop’s top-line results in 2023. In addition, GME stock might soar this year if regulators prohibit short selling.
Is GameStop on the cusp of a comeback? It’s certainly possible as the company swung to a profit in the fourth quarter of 2022. Plus, GameStop is poised for growth as the company has stopped focusing on e-commerce sales. Consequently, the company can now provide more support for its 4,400 brick-and-mortar stores.
GameStop’s short sellers have gotten burned before, and they could be in for an unpleasant surprise in the near future. So, get ready for a high-risk trade with huge potential rewards, as GameStop could soon become a controversial darling on Wall Street once again.
GameStop Overhauls Its Customer Loyalty Program
In order to secure loyalty among its patrons, GameStop offers incentives to members of its rewards program. It’s a foundational strategy as GameStop seeks to make every customer a return customer.
To that end, GameStop is reportedly making changes to its rewards program. First of all, its name will be changed from PowerUp Rewards to GameStop Pro. That’s not the most significant difference between the old and new programs, though.
Along with the name change, the new program will involve an annual price increase from $15 to $25 for members. That’s not necessarily great news for the customers, but it could provide enhanced revenue for GameStop.
Furthermore, GameStop Pro members should appreciate the special perks they’ll get through this new program. Among other incentives, they’ll have access to discounts on pre-owned games, collectibles, GameStop brand gear, clearance items and more. That’s good news all around as GameStop’s customers now have another reason to keep coming back and spend more money at the store.
Prohibition on Short Selling Could Send GME Stock Higher
As you may be aware, there’s a strategy known as short selling in which financial traders bet that the price of a stock will go down. This practice is quite common, but it’s also controversial and has been compared to market manipulation. In fact, some lawmakers and regulators have threatened to put a stop to short selling.
Recently, some regulators and politicians have ramped up their calls for an outright ban on short selling. Consequently, changes in the laws surrounding financial trading could be imminent.
Here’s what might happen during the coming weeks and months. GME stock could get squeezed higher very quickly as traders anticipate a possible prohibition on short selling. It wouldn’t matter whether the ban actually happens; it’s the expectation that would get the r/WallStreetBets crowd in a frenzy.
I expect that GME stock will make a huge move if the short sellers get squeezed out of their positions one final time in 2023. It would be historic and breathtaking to witness, if this actually happens.
Get Ready for GME Stock’s Breakout Moment
The launch of GameStop’s revised loyalty program is a brilliant move as it can keep gaming-market shoppers returning to GameStop. At the same time, a prohibition on short selling could soon prompt a massive short squeeze, sending the GameStop share price to fresh highs.
Be careful now, as an investment in GameStop involves a high level of risk. That said, I don’t see any problem if adventurous traders want to take a small position in GME stock. The share price is likely to shoot higher in the near future, regardless of whether there’s an outright ban on short selling or not.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.