GameStop Corp. GME 103.94% shares skyrocketed in the final hour of trading Wednesday, finishing the day with a rally reminiscent of last month’s blockbuster gains.
Shares of the videogame retailer finished 104% higher to close at $91.71 after hovering below $50 for most of the day. The stock, which was halted twice on Wednesday for volatility, last closed around that level on Feb. 3.
Options activity tied to GameStop also hit the highest level in two weeks, with bullish contracts significantly outpacing bearish ones, Trade Alert data show.
A clear catalyst for the sudden surge couldn’t be determined. The company said after markets closed Tuesday that its chief financial officer would resign March 26.
GameStop in recent months has come under pressure to focus more heavily on e-commerce. To help achieve that, Chewy Inc. co-founder Ryan Cohen, who holds a nearly 13% stake in GameStop through his investment firm RC Ventures LLC, was recently added to the retailer’s board.
Since GameStop’s epic rise in late January, some individual investors have remained bullish on the stock and were re-energized when Keith Gill, the trader on Reddit known as DeepF—ingValue, disclosed that he had doubled down on the shares. On Friday afternoon, Mr. Gill posted a screenshot to Reddit showing that he had purchased an additional 50,000 shares of the stock. Following the news, the stock jumped 13% Monday.
Shares of other so-called meme stocks, or stocks that are popular on Reddit’s WallStreetBets forum, also jumped late in the trading day Wednesday, with AMC Entertainment Holdings Inc. finishing 18% higher and headphone-maker Koss Corp. KOSS 54.96% surging 55%. Both stocks, among several others, saw their share prices rapidly rise in January during GameStop’s meteoric ascent. They have fallen in the weeks since.
Demand for answers as to why the stocks were rising seemed to overwhelm the WallStreetBets forum, which began to struggle to load around the close of the trading day. And some WallStreetBets users also questioned why the stock climbed so quickly. GameStop shares continued to surge in after-hours trading, and recently traded more than 60% higher.
Even with Wednesday’s gain, the stock is still trading below its intraday peak of $483 in late January. Meanwhile, short interest in the stock has substantially diminished. As of Feb. 12, short interest in GameStop stood at roughly 30% of the stock’s free float, representing the lowest short interest in the company since the end of December 2018, according to Dow Jones Market Data. That compares with well over 100% at the start of 2021.
Write to Caitlin McCabe at [email protected] and Gunjan Banerji at [email protected]
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Appeared in the February 25, 2021, print edition as ‘GameStop Shares Double at Session’s End.’
This post first appeared on wsj.com
