How GameStop Stock (GME) Became an Unlikely Hedge in Trump’s Trade War

TipRanks

Wed, Apr 16, 2025, 4:41 AM 7 min read

Amid the recent wave of volatility in the broader market driven by trade disputes, GameStop Corp. (GME) has stood out as one of the few outliers trading higher against the tide of cratered sentiment and lower prices. This is not necessarily because its core business is shielded from the impact of tariffs or weaker consumer spending—but because it often trades independently of its actual fundamentals.

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GameStop has sometimes acted like a negative beta stock and, more recently, like a low beta one. That means it tends to hold its ground—or even move in the opposite direction—when the broader market struggles. Add to that the company’s latest updates: plans to invest its large cash reserves, efforts to keep riding the meme-stock hype, and insiders consistently buying shares regardless of valuation. All of this makes GameStop’s current momentum pretty compelling, to say the least.

Sure, the way this stock trades is unpredictable. However, momentum indicators point to short- and long-term strength. Given everything that’s happened recently, I’m taking a cautiously bullish stance on GameStop.

It’s no secret that over the past five years, GameStop has been labeled a “meme stock” thanks to the extreme volatility in its share price—driven mainly by retail investors and fueled by factors not necessarily linked to the company’s actual fundamentals.

Consequently, the stock has become a rare case of an equity with a negative beta. If we look at its performance over the last five years, GameStop shows a beta of -0.41, meaning that GameStop tends to zig when the broader market zags. This inverse relationship is unusual for stocks, especially in sectors like retail, which typically move in line with the economy. That’s why assets like gold or long-term government bonds—often as portfolio hedges—are more likely to have negative betas at certain times.

That said, it’s important to note that GameStop’s negative beta over the past five years has been heavily influenced by the massive short squeezes in 2021 and the heightened volatility that followed—most recently in mid-2024. In fact, if we focus on just the past two years, GameStop’s beta is 0.79, suggesting the stock has been moving more in line with the broader market, though with less intensity.