London: Shares of video game retailer GameStop Corp rose another 130% on Wednesday in pre-market trading, as amateur investors continued to accumulate shares that have jumped nearly 700% over the past two weeks.
Stock rallies on GameStop and others, including BlackBerry Ltd, headphone maker Koss Corp, and Nokia Oyj have pushed short sellers to scramble to cover losing bets, with questions raised about potential regulatory actions.
Massachusetts’ largest securities regulator believes that trading in GameStop stock, which has jumped to $ 148 a share from $ 19.95 since Jan 12th, indicates something “systematically wrong” in trading options surrounding the stock, Barrons said Tuesday.
GameStop, BlackBerry, and Nokia were among the most heavily traded US stocks ahead of the bell, with analysts putting the moves in part on flocks of amateur investors chasing advice from discussion topics on Reddit or Facebook’s special group “Robin Hood’s Stock Market Watchlist.”
“These are not normal times, and while (Reddit) r / wallstreetbets is great to watch, I can’t help but think it’s unlikely that this will end up well for someone,” said Jim Reed, a Deutsche Bank strategist.
GameStop stock was halted by nine volatility on Monday and five times on Tuesday.
GameStop short sellers fell $ 5 billion on a market basis, net financing in 2021, which included $ 876 million in losses early Tuesday, according to analytics firm S3 Partners.
But some hedge funds refused to budge on their bearish bets, as FIS analytics data showed that investors had accumulated $ 2.2 billion in bearish bets on GameStop – which is 20% of their market capitalization.
Meanwhile in Europe, Evotec and Varta shares jumped on chatter that Melvin Capital Management was forced to unwind its short positions to cover losses in its other bearish bets, including GameStop.