When I think about the extraordinary history around Game stop (NYSE:GME) stock price is over, and there’s another twist in the story. Yesterday (June 6), the company’s shares jumped 47%, reaching 78% over the past year. The explosive move that has occurred just in the last few weeks means that some retail investors are making vast sums of money, but I’m not sure I’ll be joining that party.

Quick rally

The most amazing retail investor profit I’ve seen was posted yesterday by Keith Gill (known online as Roaring Kitty). He published a post showing his online account where he had 5,000,000 shares at $21.27 and call options at $20. Call options are a form of financial derivative instrument in which you pay a premium up front to have the right to buy a stock at a specific price. If I buy an option at $20 and the stock price increases, I will profit. If it goes down, I will simply lose the premium I paid.

Judging by yesterday’s move and today’s likely opening share price, Keith Gill would be worth a billion dollars on his GameStop shares alone. I don’t think many of us would even consider making money in the stock market in our lifetime, let alone last month.

While it’s Gill who’s making the headlines, I’m sure there are others like him who have profited hugely from the recent surge in share prices.

Speculation and fundamental value

I don’t want to sound bitter because I’m very ecstatic for Gill and others like him. However, this may give newbies a false impression of how to invest in the market.

From what I can see, Gill has almost all of his money invested in one stock. This means that it is an all-or-nothing game. There is no diversification in his portfolio that would lend a hand him if the stock price falls.

Moreover, I would classify it as purely speculative trading rather than fundamentals-based investing. The share price has not increased due to good earnings, good prospects or recent partnerships. In fact, 2023 results showed that net sales fell from $5.9 billion in the prior year to $5.3 billion.

It reported a net profit of just $6.7 million, which is rather incredible considering its current market capitalization of $14 billion. There is a clear disconnect between company performance and inventory movements.

Not for me

In my opinion, this shows that GameStop’s price fluctuations are being driven by speculative buyers and sellers. As a result, I feel it is too risky for me to engage in. There is no rational reason for me to buy at $46 now considering where I think it will be in a few years.

So while I take my hat off to Gill and company, I think we should all remember that for every billionaire who makes money, there’s a lot more money to lose.