GameStop’s meteoric rise continued with GME shares jumping 138% yesterday. The stock is up more than 1,900% this year.
Wednesday’s spike occurred even after reports emerged that short sellers, including Melvin Capital and Citron, had largely covered their positions. New Mets owner Steve Cohen’s Point72 was part of a $2.75 billion investment on Tuesday to help Melvin cover its shorts.
Tesla founder Elon Musk even jumped on board the GameStop train. On Tuesday night, he tweeted out “Gamestonk!!” with a link to Reddit group WallStreetBets — a community of bullish retail investors who have driven much of the surge.
GameStop’s steep climb has been viewed as a stand against institutional investors.
Those institutional investors meanwhile are warning of similarities between GameStop’s surge and speculative trading mania like the Dot Com bubble of the late 1990s.
The “play by our rules” rhetoric is inspiring retail investors to double down. WallStreetBets posters claim to be shooting for at least a $1,000 per share price for GameStop.
“What it proves is this retail [investor] phenomenon is here to stay,” billionaire investor and Golden State Warriors minority owner Chamath Palihapitiya told CNBC. “There are 2.7 million people inside WallStreetBets. I think they are as important as any hedge or collection of hedge funds.”
Individual investors are also rallying behind a variety of other shorted stocks:
- AMC was up 302.02% on Wednesday
- Bed Bath & Beyond was up 42.39%
- BlackBerry was up 32.66%
- Express was up 214.14%
Time will tell if GameStop’s dramatic moonshot is a one-time fluke or if retail investors are fundamentally changing the efficiency of markets. GameStop’s market valuation now sits at over $10 billion; the stock’s short-sellers have reportedly lost $5 billion this year.
