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NEW YORK: GameStop Corp shares more than doubled in trading Wednesday afternoon, surprising those who thought the video game retailer’s share price would stabilize after recent hearings in the US Congress. Brought about by the fierce recovery and the steep slide that brought Wall Street down in January.
Shares of GameStop rose 60 percent after hours to about $ 146, following a 103 percent gain during the trading day.
GameStop trading was halted multiple times after a rally that began around 2:30 p.m. ET Wednesday without an obvious catalyst.
Analysts tracking the stocks couldn’t pinpoint a single reason for the sharp move, offering reasons that included a corporate reorganization.
“GameStop announced the resignation of its CFO last night. Some may have taken this as a good sign that RC Ventures is making a difference at the company in terms of trying to accelerate the move to digital,” said Joseph Feldman, analyst at Telsey. . Advisory Group.
Stephanie Wissink, an analyst at Jefferies Research, declined to comment on the afternoon’s rally in shares, but referred to her research report following the resignation of the chief financial officer. Wissink said it didn’t seem like a coincidence that the CFO resigned after the company struck a deal with activist investor Ryan Cohen’s RC Ventures.
“We expect GME to seek out a CFO with a broader background in technology (versus retail), which will be a sign of the direction the company should take in the years to come,” Wissink wrote in his note.
The spark also seemed to take posters on Reddit’s popular WallStreetBets forum by surprise.
“Why is GME coming back up? Are you covering Melvin?” One user wrote https://www.reddit.com/r/wallstreetbets/comments/lra5cg/daily_discussion_thread_for_february_24_2021.
In January, GameStop shares soared more than 1,600 percent as retail investors bought shares to punish hedge funds like Melvin Capital, which had made outsized bets against the company. Melvin Capital said it lost 53 percent before closing its position at GameStop.
Other so-called “stonks,” an intentional misspelling of “stocks,” favored by retail traders, also soared higher in trading Wednesday afternoon. AMC Entertainment Holdings Inc gained 18%, while BlackBerry Corp was up almost 9%. Shares of Canadian cannabis company Tilray Inc were up nearly 13%.
The retail business frenzy was the subject of hearings in Washington last week, where Keith Gill, a Reddit user and YouTube streamer known as Roaring Kitty who had boosted stocks with his videos, reiterated that he was a fan of stocks.
GameStop shares remain at nearly 74 percent of their all-time high reached on Jan. 27 despite Wednesday’s rally.
(Reporting by David Randall; Editing by David Gregorio)
