Wall Street’s mania over GameStop is back again as shares in the troubled video game company more than doubled to $91.71 apiece, the stock’s best day since January 27, when it was going for $347.51 a share.
GameStop Corp shares have surged more than 50 percent in early deals as amateur investors jumped back into the stock weeks after an unprecedented short squeeze triggered a 1,600 percent 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", favoured 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.
— Ryan Cohen (@ryancohen) February 24, 2021
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 percent in trading before the bell at $141.70 at 0630 ET. Headphone maker Koss Corp surged 57 percent, while cannabis company Sundial Growers rose 10 percent.
Shares of cinema operator AMC Entertainment , another stock caught up in last month's rally, jumped 17 percent in pre-market trading on Thursday following an 18.1 percent 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 percent 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.
READ MORE: The GameStop, Reddit and Robinhood saga, simplified
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.
"It's really stupid to have a culture which encourages as much gambling in stocks by people who have the mindset of racetrack bettors," said Munger, Berkshire Hathaway's vice chairman.
GameStop's US-listed shares soared nearly 104 percent on Wednesday. The volatility in GME, AMC Entertainment and other stocks led to outages on Reddit and periodic trading halts by the New York Stock Exchange.
GameStop’s wild ride shocked Wall Street, forcing the market to gird for more volatility. It prompted Congress to hold a House hearing last week into what led to the frenzy and whether smaller investors need to be shielded from taking big risks.
Online brokerage Robinhood said in a tweet that the NYSE action would impact all brokerages, but that it had not paused trading on the shares.
"It's a pretty risky play to try and buy now ... what we might (see) at the open of the cash market is some people trying to get in," said Oriano Lizza, premium sales trader at CMC Markets in Singapore, which does not offer pre- or post-market trade.
The latest surge comes after a couple of weeks that saw the shares move in relatively tighter ranges.
"It's a marathon, not a sprint. Whatever happens resist the urge to sell. The longer we hold the higher it goes," said @catchme1fyoucan, an Italy-based user of retail trading platform eToro, in a discussion on GameStop.
READ MORE: Wall Street got wrecked by Reddit and is now crying foul
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