Individual investors who have recently stacked up at GameStop Corp. they are gaining a lap of victory this week after shares of the troubled company have risen more than 90% in the past two days, putting stocks at the pace of its best weekly performance on record.
For weeks, members of Reddit’s popular WallStreetBets forum have been promoting GameStop, encouraging others to take stock from the video game store and start betting higher. Several posts on the forum had pointed out that GameStop’s low bets from short sellers had been at high levels.
Short interest rates, which indicate the interest of investors opting for a drop in value, have hovered around 138% of the free float of shares this year, according to data from FactSet. This makes it the second shortest company on the New York Stock Exchange and Nasdaq Inc., according to Dow Jones Market Data. This led some Reddit users to predict that stocks could rise rapidly if short sellers suddenly had to cover their bets by buying stocks if the shares suddenly increased in value.
This week, that forecast finally seemed to take shape after news of changes to the GameStop board sent shares.
On Monday, the company said it had reached an agreement to add the co-founder of Chewy Inc. Ryan Cohen and two former GameStop board executives.