CNBC’s Jim Cramer on Thursday commented on the large price increases in the stock of two-year-old retailers.
Shares of Bed Bath & Beyond rose nearly 19% during the session, a figure that is best compared to the 27% rally in GameStop, whose shares have only doubled three times this week to levels in around six%. year has not been seen.
“Like it or not, at the moment we have a bull market, and I bet you’ll see more stories like GameStop and Bed Bath,” the ‘Mad Money’ host said. “I do not recommend trying to play it.”
GameStop, a video game company, has interested buyers in the news that online pet food company Chewy, co-founder and former CEO Ryan Cohen, an activist investor, would join the board, a sign that the company is entering the digital age years of trouble. The stock hit more than 12% to open the week on Monday before rising again on Wednesday with a 57% increase, the biggest one-day increase since the game retailer became a public entity in 2002.
Cramer linked the increase in the value of GameStop to a short press, where a share price grew exponentially, driven by short sellers placing bets that shares would fall. Market participants can place a short bet by borrowing and selling shares with the hope of repaying them at lower levels before returning the shares to a borrower, which will make up the difference in price change. A stock that rises rather creates losses for the borrower.
Furthermore, the enthusiastic young investors help with social media sites like Reddit for stocks that offer the stock, he added.
“If you go to these sites … it’s mostly occupied by younger readers and contestants who simply want to inflate the pants in this case by buying GameStop at any price and offering the stock up, up and up. To the shorts. crush so they have to cover, ‘Cramer said. “It’s amazing to look at. I think they succeed beyond their wildest dreams. “
Bed Bath and Beyond shares also caught fire with the help of social media investors who wanted to break the plans of short sellers, Cramer said. The retailer, which underwent a recovery plan by closing underperforming stores, grew 54% this year and closed Thursday’s session at $ 27.34.
More than 60% of the Bed Bath & Beyond shares are in short-term interest, while about 140% of the GameStop shares were sold short, according to information compiled by FactSet.
“I actually do not like short bashing and such stuff feels incredibly sketchy to me,” Cramer said. “But you know what, I can not deny that it works.”
In Thursday’s session, the three main averages fell.