Ramin Talaie | Bloomberg | Getty Images
GameStop shot up once again and topped $ 450 every Thursday before the market before the Reddit-driven retail momentum continued to heat up.
Shares of the brick and mortar video game retailer reversed losses in overnight trading, with a jump of 31% to $ 451.10 in premarket trading. The move continued on Wednesday with a rise of more than 130%, with a high volume, which raised its gains to 466%. The shares were worth about $ 40 just a week ago.
GameStop has been a hot target in Reddit’s “Wallstreetbets” chat room, where an army of home-based retail investors teamed up to raise stocks and extract short-selling hedge funds. The forum, which now has more than four million members, went into privacy briefly Wednesday night, as moderators said they were “unable to secure Reddit’s content policy.”
A popular post said Thursday, “Don’t be scared of the fall of $ GME $ BB. Hedging trading after hours to scare them all … KEEP BUYING AND BEHAVING.” The post quickly drew over 1,000 comments in an hour.
Another prominent message from the community said “buy high, never sell,” with a GameStop photo.
Some of the passionate Reddit users have been sharing screenshots of their brokerage accounts, showing monstrous profits from trading on GameStop and other names.
“The stock action of GameStop is a game of music chairs and my advice to investors is to sell before the music stops,” said David Trainer, CEO of New Constructs. “As fickle as the crowd of marketers has been selecting GameStop as one of their favorite stocks, they could be as fickle as when to drop stocks.”
The Reddit crowd began to sign up for other very short names, such as Bed Bath & Beyond and AMC Entertainment.
AMC soared 300% on Wednesday alone, raising its weekly concentration to more than 450%. In the previous session, more than a billion shares changed hands at AMC, marking its day with the highest volume in history. Bed Bath & Beyond has also risen 75% this week. The duo fell slightly in the premarket trade this Thursday.
Extreme speculative behavior among novice investors worries many on Wall Street, as increased losses by hedge funds could affect other areas of the market. Some also believe that this buying frenzy can undermine overall market confidence and destabilize conditions.
The S&P 500 and Dow Jones Industrial Average suffered their biggest losses since October Wednesday as worries about mania intensified.
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