GameStop share price explodes for second day as Reddit celebrates

Written by The ReReport
As seen in the Source link, written by on 2021-02-26 18:39:53

GameStop’s stock price exploded again after more than doubling in a wild session as Reddit’s army of investors rebel against Wall Street.

GameStop’s stock price has exploded again as Reddit’s army of retail traders launched a second salvo in its rebellion against Wall Street.

Shares in the video-game retailer surged 101 per cent to an intraday peak of $US184.64 ($235.31) after more than doubling in a wild Wednesday session, adding as much as $US9.7 billion ($A12.3 billion) to its market value in just two days.

Traders on the WallStreetBets forum celebrated the massive move in the stock they turned into a symbol of a populist uprising against hedge funds and big-time investors.

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“Who’s putting billboards up again? I love the stock!” a Redditor named immya124 wrote on the message board on Thursday.

“GME is what separated the men from the boys,” Carl95M posted, referring to GameStop’s ticker symbol and adding two of WallStreetBets’ favourite emojis – a rocket and a diamond.

It’s unclear what sparked the meme stock revival after about two weeks of muted trading.

One potential catalyst might have been a cryptic Twitter post from GameStop board member and investor Ryan Cohen, the co-founder who some fans see as key to improving the company’s fortunes.

The tweet, posted about two hours before the markets closed on Wednesday, featured a photo of a McDonald’s ice cream cone and was captioned with a lone frog emoji.

Traders on Twitter and Reddit speculated wildly about its meaning. Some thought Cohen was hinting that he would fix GameStop by likening the company to McDonald’s notoriously unreliable ice cream machines.

Some claimed it was a sign that he would be named GameStop’s chief executive, pointing to an anecdote about Chewy’s first board meeting including “a trip to McDonalds for soft serve”.

Thursday’s rally put a fresh squeeze on short sellers, who have added nearly two million GameStop shares worth $US181 million ($A230 million) to their bets against the stock over the past week, according to data from S3 Partners.

Investors with short positions in the Texas-based company have now racked up nearly $US11 billion ($A14 billion) in mark-to-market losses since the start of the year, S3’s data shows.

“GME’s short side was not the primary driver of the sudden and sharp increase in its stock price,” S3 managing director Ihor Dusaniwsky said. “While there were some buy-to-covers brought about by large mark-to-market losses they were offset by new short sellers looking for a pull back from this volatile price move.”

Despite surging for the past two days, GameStop shares were still trading well below the peak of $US483 ($A615) they reached in late January as the Reddit-fuelled market frenzy reached a fever pitch.

The unprecedented rally began as an online campaign against hedge funds that had bet against GameStop and other beaten-down companies and ended up attracting the attention of federal regulators.

Keith Gill, the retail trader known as “DeepF–ingValue” on Reddit who’s been credited with starting the GameStop surge, doubled down on his investment after testifying before the House Financial Services Committee last week.

GameStop’s explosion came after the Texas-based company said chief financial officer James Bell would leave at the end of March. He was reportedly pushed out by board member and investor Ryan Cohen, the co-founder who some GameStop fans see as key to improving the company’s fortunes.

After Cohen tweeted a photo of a McDonald’s ice cream cone with a frog emoji on Wednesday, some online traders took the cryptic post as a sign that he was executing some grand turnaround plan.

“The frog is the long-used symbol of transition and change, from tadpole to frog,” one Reddit poster speculated.

This article originally appeared on the New York Post and was reproduced with permission

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