GameStop Corp shares surged more than 50% in early deals on Thursday as amateur investors jumped back into the stock weeks after an unprecedented short squeeze triggered a 1,600% rally in the video game retailer.

The latest moves build on Wednesday’s rally in GameStop and other so-called “stonks” – an intentional misspelling of “stocks” – favored by retail traders on social media sites such as Reddit’s WallStreetBets.

The new frenzy puzzled analysts, who had ruled out another short squeeze of the stock which had battered some hedge funds, and fueled more hype after some Twitter users pointed out a cryptic tweet of an ice-cream cone photo from activist investor Ryan Cohen – a major shareholder in GameStop and a board member.

A short squeeze takes place when the price of a heavily-shorted stock rises sharply, forcing short-sellers who had bet against the stock to buy it at those prices to avoid further losses.

GameStop shares were up 54.5% in trading before the bell at $141.70 at 0630 ET. Headphone maker Koss Corp surged 57%, while cannabis company Sundial Growers rose 10%.

Shares of cinema operator AMC Entertainment, another stock caught up in last month’s rally, jumped 17% in pre-market trading on Thursday following an 18.1% rise on Wednesday.

Reddit discussion threads were buzzing again about GameStop on Thursday, with members exhorting others to pile into the stock as the rally gathers steam.

“Bought lots more #GME today, let’s keep fighting !!,” wrote one Reddit user Fundssqueezzer, while another user Responsible_Fun6255 said, “Rise of the planet of the ape: GME edition”.

Earlier on Thursday, GameStop’s Frankfurt-listed shares trebled at one point, overshooting its 100% surge on Wall Street overnight, as European retail traders joined in the fresh buying push.

The sharp moves surprised the market, which thought the excitement behind the recent Reddit-fueled rally had died down.

RISKY BETS

GameStop shares skyrocketed in January as retail investors, urged on by popular Reddit forum WallStreetBets, bought the stock as a way to punish hedge funds that had taken an outsized short bet against it.

The squeeze “personally humbled” Melvin Capital’s Gabriel Plotkin, whose firm was left needing a $2.75 billion dollar lifeline supplied by hedge fund Citadel LLC’s Kenneth Griffin and Point72 Asset Management’s Steven Cohen.

The risky trading strategies employed by some traders on Reddit have drawn the ire of investing legends such as Charlie Munger, long time business partner of Warren Buffett. Read More

By Ian Dei

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