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GameStop Shares Gain Nearly 60% as Meme Stock Market Returns in Full Force
GameStop Stock (GME) rose nearly 60% on Tuesday, adding to a meme-fueled rally that saw shares of the video game retailer rise 74% in the previous session.
The rise in GameStop was also accompanied by a rise in AMC (AMC) stock. Shares of the theater chain operator rose about 30% after rising as much as 120% on Tuesday.
In an SEC filing, AMC released issued approximately 72.5 million new shares in the previous session, raising approximately $250 million for the company.
Other heavily sold stocks rising on Tuesday included SunPower (SPWR), increase of 63%; Beyond Meat (PORND), an increase of 25%, and Lugar da Criança (PLCE), an increase of around 6%.
GameStop shares rose as much as 110% in the previous session after the resurgence of Keith Gillalso known as “Roaring Kitty”, whose positive case at GameStop triggered the 2021 meme stock rally.
Shares were flat year-to-date before Monday’s rally, but have risen about 60% in the past month. GameStop shares are up more than 180% in the last month, not including Tuesday’s gains.
In a note to clients, Nicholas Colas, co-founder of DataTrek Research, wrote that this recent trading action “feels like an echo of early 2021, when this account helped fuel a sharp squeeze on GameStop.”
Colas noted that the move back into 2021 was a little bigger than what we’ve seen so far this time around, with GameStop shares rising 1,500% in January 2021 before giving up most of those gains.
The pain that short sellers faced during the original rally in meme stocks three years ago hasn’t deterred bets against these companies.
Short interest in GameStop has remained high since that meme rally, data from S3 Partners showed, at nearly 24% of the float.
GameStop short positions fell $1.36 billion on Tuesday after losing nearly $900 million on Monday.
“We are seeing continued coverage of squeeze-related selling due to the revival of meme trading,” said Ihor Dusaniwskymanaging director of S3 Partners.
In Colas’ opinion, a trader who shorts a rising stock with this type of aggression is left with only one option: “His only option is to close the position regardless of the price.”
“In the case of GME, we also fear that retail traders will be drawn into a repeat of 2021,” Colas added.
A screen displays the GameStop logo and business information on the floor of the New York Stock Exchange (NYSE) in New York City, USA, on March 29, 2022. REUTERS/Brendan McDermid (REUTERS/Reuters)
The meme frenzy three years ago attracted national attention, attracting an army of retail merchants during pandemic lockdowns.
The story continues
“I don’t see it as I did in 2021, when it was almost a transformative moment, dragging, you know, tens of millions of people back into the market,” said Tom Sosnoff, CEO of tastelive, an options company and futures trading platform. .
Still, YouTuber Matt Kohrs, who has held roles at GameStop and AMC in the past, says the central aspect of “the small versus the big” during the small struggles of 2021 still applies to today’s rally.
“The perception is that the entire system is configured and isolated to benefit the powerful elite. GME is the symbol of the populist movement against this concept,” said Kohrs.
“The only real change I see from a psychological point of view is not being locked in the house anymore,” he added.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on Twitter at @ines_ferre.
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