GameStop shares soar more than 20%, on track for fifth day of gains
Shares of GameStop jumped on Tuesday for the fifth consecutive day, as the meme stock rally that began at the beginning of the year got more juice on news about the video game retailer’s e-commerce strategy and speculation that small investors will pour stimulus check funds into stock markets.
A day after the company entrusted leadership of its online sales efforts to board member and major shareholder Ryan Cohen, co-founder of online pet retailer Chewy Inc. the GameStop shares were up 23.5% to $239.80 in early trading.
Other stocks favored by retail investors on forums such as Reddit’s WallStreetBets were raised by the resurgent rally. Market observers have cited the U.S. Senate’s passage of a $1.9 trillion stimulus bill including $1,400 direct payments to Americans as one catalyst.
Tax experts said, after the aid bill is finalized and signed into law, the U.S. government would be able to start delivering $1,400 checks quickly.
Since January, GameStop, which is one of the hottest meme stocks followed on social media, shares have had several wild swings.
Shares of AMC Entertainment were recently up around 5%, headphone maker Koss Corp climbed 1% and Blackberry Ltd rose by around 2%.
Cohen joined the board in January shortly before a social media frenzy drove a meteoric rise in which GameStop shares surged more than 1,600%.
The eruption of buying drove hedge funds that had bet against the stock to unwind their short positions. This situation is known as a “short squeeze.” In the following month, GameStop pared most of those gains,
Some analysts say maybe another short squeeze is adding to the recent gains. According to data from financial analytics firm S3 Partners, short interest in GameStop was valued at $2.58 billion, or 24.3% of the stock’s float on Tuesday, compared to $1.80 billion, 32.6% in late February.
Data from S3 Partners showed that since February 26, the number of shares sold short has dropped by about 25% to 13.3 million shares.
