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GameStop (GME) moving on up to S&P MidCap 400 index next week

Everyone's favorite video game retailer has had a heck of a run in 2021, and now GameStop is moving up to the S&P MidCap 400 index.
Captain Business
Captain Business
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GameStop's stock has had a massive run from the company's low point in 2020, and with that capital appreciation has come more attention from index funds. Yesterday, S&P Dow Jones Indices announced that GameStop will be joining the S&P MidCap 400 index. 

Here's an excerpt from the S&P Dow Jones Indices press release:

What does this mean for GameStop (GME) shareholders?

GameStop (GME) shares currently value the company at a $12 billion market capitalization. The company's weighting in the S&P MidCap 400 will definitely be less than its current weighting in the S&P SmallCap 600. This is not unlike what happened late last month when the stock moved up from the Russell 2000 to the Russell 1000. GameStop was a big fish in a small pond earlier this year, but the massive move in the stock has lead it to be too big for the smallest indices but too small for the benchmark S&P 500. GameStop's stock has been down today, but it is hard to say if the market will react to this news today or closer to the date of the stock's addition to the S&P MidCap 400 on August 4, 2021.

Index funds that mimic the S&P SmallCap 600 will be sellers of GameStop over the next week while funds that try to mirror the moves of the S&P MidCap 400 will have to buy the stock. That push and pull of supply and demand of shares could lead to some confusing price movements over the next week. 

This isn't the only news coming from the company today. GameStop just announced that EB Games in Canada will be rebranded by the end of the year. 

This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.

Stonk Market Expert
Stonk Market Expert

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