The wild ride of GameStop Corp. continued trading the market as shares fluctuated following reports from Melvin Capital closed his short position.
Shares rose 66% to $ 245 at 6:37 a.m., more than doubling from the recent close of $ 147.98. This followed the 93% rise on Tuesday, meaning GameStop rose more than eightfold this month in a dizzying rally fueled by Reddit-charged day traders.
After a fierce session on Tuesday, the stock’s earnings outside the normal hours after Musk, head of Tesla Inc., reached new extremes tweeted a link to a Reddit thread about the company. Well-known fund manager Michael Burry warned that the manic rally had gotten out of hand and called the rise of the stock “unnatural, insane and dangerous”. Melvin Capital’s Gabe Plotkin Closes His Short Position On Tuesday Afternoon, CNBC’s Squawk Box report.
Another warning was issued by Bank of America Corp. analysts. While raising their price target to $ 10 from $ 1.60 to reflect the recent rise in the stock, they noticed that GameStop is in a ‘weaker and not a stronger place’ and reiterated their underperformance recommendation.
“While it is difficult to know how much very short-term interest rates and retail ownership can still put upward pressure on equities, we think fundamental factors will again be of value,” analysts led by Curtis Nagle wrote in a note. “We remain skeptical about the possibility of a turnaround.”
Born in chat rooms for day traders, Euphoria has turned GameStop into the largest retail store of the retail era, unlikely to be a sign of the newfound power of individual investors. At the same time, it has become a major headache for institutional investors who bet it would fall. An epic brief push that lifted the shares sparked a search for other companies that are similarly vulnerable, with Express Inc., Bed Bath & Beyond Inc. and AMC Entertainment Holdings Inc. under shares. rises in the pre-trading market on Wednesday.
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– With assistance by Jan-Patrick Barnert
(Updates with Melvin closing the short position in second and third paragraphs, Bank of America’s price target in fourth place)