Tiffany Hagler-Geard | Bloomberg | Getty Images
GameStop shares gained 11% in premarket trading on Wednesday as the short budget driven by Reddit retailers appears to be reviving after a sharp drop.
Shares had fallen more than 11% earlier Wednesday morning, but went black shortly after 5 a.m. ET.
Shares of the brick and mortar video game retailer rose 1.625% in January and 400% last week as traders led by Reddit’s Wire WallStreetBets stacked up on the shares.
But the momentum had waned earlier this week. Shares of Gamestop fell 60% on Tuesday and have lost more than 70% of their value since Friday.
AMC Entertainment, another very short stock that was also targeted by Reddit traders, rose about 4% in premarket trading.
Robinhood and other retail apps continue to limit some purchases from a stock collection chasing the Reddit thread. Many Wall Street hedge funds began hedging short late last week after suffering significant losses.
Short-term selling is a strategy in which investors borrow shares of a stock at a certain price, according to the expectations that the market value will fall from this level when it is time to repay the borrowed shares. The purchase of shares borrowed to close a short position, whether for profit or loss, is known as short hedging.