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Shares of video game retailer GameStop Corp rose another 130 percent on Wednesday in pre-market trading, as hobbyist investors continued to pile stocks that soared nearly 700 percent in the past two weeks.
FILE PHOTO: A sign is seen outside a GameStop store in Niles, Illinois, USA, May 23, 2016. REUTERS / Jim Young / File Photo
REUTERS: Shares of video game retailer GameStop Corp rose another 130 percent on Wednesday in pre-market trading as hobby investors continued to rack up stocks that have soared nearly 700 percent in the past two weeks.
Stock spikes at GameStop and others, including BlackBerry Ltd, headphone maker Koss Corp, and Nokia Oyj, have caused short sellers to scramble to hedge losing bets, while raising questions about potential regulatory restrictions.
Massachusetts’ top securities regulator believes that GameStop stock trading, which has risen to $ 148 a share from $ 19.95 since Jan. 12, suggests there is something “systemically wrong” about options trading around to the stock, Barron’s reported Tuesday.
GameStop, BlackBerry and Nokia were among the most traded US stocks before the bell, and analysts attributed the moves in part to droves of amateur investors seeking advice from Reddit discussion threads or the private Facebook group “Robin Hood’s. Stock Market Watchlist “.
“These are not normal times and while it is fascinating to watch (Reddit) r / wallstreetbets, I can’t help but think that this is unlikely to end well for anyone,” said Deutsche Bank strategist Jim Reid.
GameStop stock trading was halted for volatility nine times on Monday and five times on Tuesday.
Short sellers on GameStop were down $ 5 billion on a market-to-market basis, net of funding in 2021, which included $ 876 million of losses early Tuesday, according to analytics firm S3 Partners.
But some hedge funds have refused to budge on their bearish bets, and FIS analysis data shows investors had amassed $ 2.2 billion in bear bets on GameStop, a whopping 20% of its market capitalization.
Meanwhile, in Europe, Evotec and Varta stocks jumped at talk that Melvin Capital Management was being forced to undo its short positions to cover losses on its other bearish bets, including GameStop.
(Reported by Thyagaraju Adinarayan in London and Sruthi Shankar and Aaron Saldanha in Bengaluru; edited by Sujata Rao and Anil D’Silva)
