GameStop shares surge 130% in premarket as meme stock craze returns

Shares
of


GameStop
jumped
in
premarket
on
Tuesday,
on
track
to
extend
the
meme
stock
rally
started
by

Roaring
Kitty‘s
first
online
post
in
three
years.

Shares
of
video
game
retailer
GameStop
traded
134%
higher
in
premarket,
following
a
74%
advance
on
Monday.
AMC
soared
120%
in
premarket
even
after
the
movie
theater
chain

raised
about
$250
million
of
new
equity
capital
during
Monday’s
wild
trading.

Other
so-called “meme
stocks”
were
also
poised
to
open
sharply
higher
on
Tuesday.
Shares
of
one-time
dominant
smartphone
maker

BlackBerry
popped
25%
in
premarket
trading,
while
headphones
manufacturer

Koss
was
up
33%.

The
meme
stock
phenomenon
appears
to
have
been
reignited
by
a
recent
social
media

update
from “Roaring
Kitty.”
The
man,
whose
legal
name
is
Keith
Gill,
posted
a
picture
on
the
X
platform
of
a
video
gamer
sitting
forward
on
their
chair
—
a
meme
used
by
gamers
to
indicate
they
are
taking
the
game
seriously.

It
marked
Gill’s
first
post
on
the
platform
since
2021,
and
has
since
been
viewed
more
than
23
million
times.
Gill
followed
up
with
a
series
of
posts
of
short
videos
from
popular
TV
shows
and
movies,
although
the
meaning
behind
some
of
them
was
unclear.

“It
looks
like
retail
investors
are
becoming
more
bullish
again
and
willing
to
take
on
more
risk,”
Neil
Wilson,
chief
market
analyst
at
Finalto,
said
in
a
note. “There
is
no
fundamental
reason
for
the
move
as
such
–
GME’s
last
earnings
report
was
abysmal.”

In
late
March,
GameStop
said
it
had
cut
an
unspecified
number
of
jobs
to
reduce
costs,
and
reported
lower
fourth-quarter
revenue
amid
rising
competition
from
e-commerce-based
competitors.

Gill
is
a
former
marketer
for
Massachusetts
Mutual
Life
Insurance.
Also
known
as
DeepF——Value
on
Reddit,
he
led
an
army
of
day
traders
who
cheered
each
other
on
and
piled
into
the
brick-and-mortar
video
game
stock
and
in
GameStop
call
options
between
2020
and
2021.

The
aim
was
to
drive
up
shares
of
certain
previously
unloved
companies,
putting
pressure
on
hedge
funds
that
had
been
betting
they
would
decline
in
value.

Shares
of
GameStop,
which
hit
an
all-time
intraday
high
of
$120.75
in
January
2021,
later
collapsed
along
with
other
meme
stocks
as
interest
faded.
GameStop
shares
have
been
trending
lower
in
recent
years,
touching
a
three-year
low
of
$9.95
last
month.
They
ended
Monday
at
$30.45.

Analytics
firm
Ortex
Technologies
estimated
that
losses
for
GameStop
short
sellers
came
in
at
$868
million
as
of
Monday’s
close,
and
stood
at
$1.26
billion
for
May.

At
the
price
of
$46
per
share
early
Tuesday,
Ortex
Technologies
said
GameStop
short
sellers
had
lost
a
further
$1.04
billion,
pushing
total
losses
for
May
to
just
over
$2.3
billion.

“With
GameStop’s
short
interest
nearing
25%
of
the
free

float,
the
highest
level
since
2022,
and
a
staggering
150%
price
increase
in
under
two
days,
the
situation
unmistakably
echoes
the
events
of
January
2021,”
a
spokesperson
for
Ortex
Technologies
told
CNBC
via
email.

“Notably,
there
are
no
indications
that
short
position
holders
have
begun
closing
their
positions.
In
such
a
dynamic
market
environment,
monitoring
short
interest
levels
is
crucial
as
these
metrics
signal
when
short
sellers
start
to
close
their
positions,
potentially
adding
additional
buying
pressure
to
the
stock,”
they
added.

Short
selling
is
a
strategy
in
which
investors
borrow
shares
at
a
certain
price,
expecting
the
market
value
to
fall
below
that
level
when
it’s
time
to
pay
for
the
borrowed
shares.

—
CNBC’s
Ganesh
Rao
and
Fred
Imbert
contributed
to
this
report.