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GameStop Shares Gain Over 100% as Meme Stock Market Returns in Full Force
GameStop Stock (GME) rose as much as 118% in Tuesday’s premarket trading, adding to a Monday rally that sent the video game retailer’s shares up 74%.
Monday’s move, in which shares rose as much as 110% and were halted by volatility several times during the trading session, followed the resurgence of Keith Gillalso known as “Roaring Kitty”, whose positive case at GameStop triggered the 2021 meme stock rally.
GameStop shares have remained flat year-to-date before Monday’s rally, but are up about 60% over the past month. GameStop shares are up more than 180% in the last month, not including Tuesday’s pre-market gains.
Monday’s gain in GameStop was also accompanied by a rally in AMC (AMC), which rose almost 80%.
On Tuesday, AMC shares rose another 120% in premarket trading. In an SEC filing, AMC also released issued approximately 72.5 million new shares, raising approximately $250 million for the company in the process.
Other heavily shorted stocks that rallied in premarket trading on Tuesday included SunPower (SPWR), a 55% increase, Beyond Meat (PORND), a 23% increase, and The Children’s Place (PLCE), an increase of 10%.
In a note to clients on Tuesday, Nicholas Colas, co-founder of DataTrek Research, wrote that this recent trading action “feels like an echo of early 2021, when this account helped fuel a sharp squeeze on GameStop.”
Colas noted that the pullback in 2021 was a little bigger than what we’ve seen so far this time around, with GameStop shares rising 1,500% in January 2021 before giving up most of those gains.
The pain that short sellers faced during the original rally in meme stocks three years ago hasn’t deterred bets against these companies. Short interest in GameStop has remained elevated since that meme rally, data from S3 Partners showed, with 24% of the float sold short on Monday.
Ihor Dusaniwsky, managing director at S3 Partners, told Yahoo Finance on Monday that GameStop shorts were down more than $1.3 billion in month-to-date losses in May following Monday’s rally.
Tuesday’s initial spike will increase this count.
In Colas’ opinion, a trader short on a stock that recovers from this type of aggression is left with only one option: “his only option is to close the position regardless of the price”.
“In the case of GME, we also fear that retail traders will be drawn into a repeat of 2021,” Colas added.
The story continues
A screen displays the GameStop logo and business information on the floor of the New York Stock Exchange (NYSE) in New York City, USA, on March 29, 2022. REUTERS/Brendan McDermid (REUTERS/Reuters)
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on Twitter at @ines_ferre.
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