GameStop stock gains more than 60% as meme stock market makes a strong comeback

GameStop (GME) stock rose more than 60% on Tuesday, adding to the meme-fueled rally that sent the video game retailer’s shares soaring 74% on Monday.

Gains in GameStop were also accompanied by a short squeeze in theater chain operator AMC (AMC).

On Tuesday, AMC stock rose more than 100% before paring its gains. And in the SEC filing, the company also a statement It issued approximately 72.5 million new shares, raising about $250 million for the company in the process.

Other heavily shorted stocks that rose on Tuesday include SunPower (SPWR), which rose 90%; Beyond Meat (BYND), up 25%, and Children’s Place (PLCE), up about 6%.

GameStop shares on Monday surged as much as 110% and were halted in volatility several times during the trading session, following the resurgence of Keith Gill, also known as “Roaring Kitty,” whose bullish case on GameStop sparked the stock’s 2021 rally. .

GameStop shares had been flat year to date before Monday’s spike but have risen nearly 60% in the past month. GameStop stock is now up more than 180% over the past month, not including Tuesday’s gains.

In a note to clients, Nicholas Colas, co-founder of DataTrek Research, wrote that this latest trading action “seems like an echo of early 2021, when this calculation helped fuel a ferocious short squeeze in GameStop.”

Colas noted that the comeback in 2021 was a little bigger than what we’ve seen so far this time around, with GameStop stock rising 1,500% in January 2021 before losing most of those gains.

However, the pain short sellers experienced during the original meme stock rally three years ago did not prevent bets against these companies.

Data from S3 Partners showed that short interest in GameStop has remained high since the meme’s rise, with nearly 24% of the float.

GameStop shorts fell $1.36 billion on Tuesday after losing nearly $900 million on Monday.

“We are seeing continued short covering due to pressure from the birth of meme trading.” Ihor Dusaniwski saidManaging Director of S3 Partners.

In Colas’ view, a trader who sells stocks that are rising with this kind of aggression is left with only one choice: “Your only option is to close the position regardless of the price.”

“In the case of GME, you also fear that retail traders will be tempted to bring back 2021,” Colas added.

The story continues

The meme craze three years ago gained national attention, attracting an army of retailers during pandemic lockdowns.

“I don’t look at this at all as much as I did in 2021 when it was almost a transformative moment, pulling, you know, tens of millions of people into the market,” said Tom Sosnoff, CEO of Tastylive, an options and solutions company. Futures trading platform.

However, YouTuber Matt Kohrs, who has held positions in GameStop and AMC in the past, says the “little guy versus big guy” pivot aspect during the 2021 short squeezes still holds true in today’s rally.

“The perception is that the entire system is set up and isolated to benefit the powerful elite. GME is a symbol of the populist movement against this concept,” Kohrs said.

He added: “The only real change I see from a psychological point of view is not turning inward anymore.”

Ince Ferry is Yahoo Finance’s chief business correspondent. Follow her on Twitter at @ines_ferre.

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