GameStop saw its share prices surge once again this week as the “meme stocks” battle between Reddit traders and Wall Street short sellers reignited.
Shares in GameStop, the embattled US video game retailer, shot up 27 per cent in late trading on Tuesday leaving many analysts scratching their heads for the reason behind the rally.
More than 14 million GameStop shares changed hands throughout the day, around seven times its total monthly average, seeing stocks surge to highs of 36.5 per cent at $225 per share.
Major gains were also seen in other popular ‘meme stocks’ favoured by the amateur investors who generally gather on the r/WallStreetBets subreddit, including AMC Entertainment, Clover Health and Bed Bath and Beyond.
As with the initial surge in stock prices seen earlier this year, the gains have cost Wall Street short sellers hundreds of millions.
Short sellers, who bet against companies they think are due to see share prices collapse, lost close to $1 billion on GameStop and AMC stocks alone this week, according to Ortex co-founder Peter Hillerberg.
“Heavily shorted stocks have, for the last month, been less volatile than earlier this year. Today we saw an end to this,” he added.
In March this year, the New York Stock Exchange was forced to halt GameStop’s stock numerous times as it jumped from $140 to highs of $348.50, before settling at around $260 in a single day.
This marked the second time this year that GameStop’s stock has endured explosive volatility, seeing stocks break records in January amid a collective and coordinated effort by amateur traders to disrupt Wall Street short sellers.
It’s not yet clear why the stocks have rallied once again, or whether this will be a short lived flare up of the ongoing battle between Wall Street and amateur traders.