Ramin Talaie | Bloomberg | Getty Images
GameStop soared again, putting $ 450 apiece on the market on Thursday as Reddit-driven retail momentum continued to heat up.
Shares of the video game retailer reversed the losses in overnight trading, while last time they rose 31% to $ 451.10 in pre-trading. The move followed a more than 130% rally Wednesday in heavy volume, pushing its week-to-date gain to 466%. The stock was worth about $ 40 just a week ago.
GameStop was a fiery target in the “Wallstreetbets” Reddit chat room, where an army of home retail investors gathered to push shares higher and squeeze out short-selling hedge funds. The forum, which now has more than four million members, briefly went private on Wednesday night because the moderators said they were ‘unable to ensure Reddit’s content policies’.
One trend reported Thursday said: “do not be afraid of the drop in $ GME $ BB. Hedge funds trade after hours to scare everyone … KEEP PURCHASING AND KEEPING.” The report quickly delivered more than 1,000 comments within an hour.
Another top post in the community said ‘buy high, never sell’, with a picture of GameStop.
Some of the passionate Reddit users shared screenshots of their brokerage accounts, which showed monstrous returns from trading in GameStop and other names.
“The action in GameStop’s shares is a game of music chairs and my advice to investors is to sell before the music stops,” said David Trainer, CEO of New Constructs. “Just as fickle as traders used to choose GameStop as one of their favorite stocks, they can be just as fickle about when to drop the stock.”
The Reddit crowd included other heavily abbreviated names, including Bed Bath & Beyond and AMC Entertainment.
AMC only shot up 300% on Wednesday, bringing its weekly rally to more than 450%. In the previous session, more than one billion shares of ownership changed in AMC, which was the highest day ever. Bed Bath & Beyond also rose 75% this week. The duo fell slightly in market trading on Thursday.
The extreme speculative behavior among novice investors makes many people on Wall Street nervous because increasing losses by hedge funds could spill over to other parts of the market. Some also believe that this buying frenzy can harm the overall market confidence and destabilize the conditions.
The S&P 500 and the Dow Jones Industrial Average suffered their biggest losses on Wednesday since October when concerns about the mania worsened.
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