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Ramin Talaie | Bloomberg | Getty Images
GameStop shot up again, surpassing $ 450 each in pre-release Thursday, as Reddit-driven retail momentum continued to heat up.
Shares of the brick-and-mortar video game retailer offset losses in overnight trading, jumping 31% for the last time to $ 451.10 in pre-market trading. The move follows a rally of more than 130% Wednesday in significant volume, pushing its gains for the week to 466%. The stock was worth around $ 40 just a week ago.
GameStop has been a hot target in the “Wallstreetbets” Reddit chat room where an army of home-based retail investors have come together to push stocks higher and oust short hedge funds. The forum, which now has more than four million members, briefly went private on Wednesday evening, as moderators said they were “unable to guarantee Reddit’s content policy.”
A trending article Thursday said, “Don’t be afraid of the $ GME $ BB drop. Hedge funds trade after hours to scare you … KEEP BUYING AND HOLDING.” The post quickly drew over 1,000 comments in an hour.
Another prominent community article read “buy high, never sell”, with a photo from GameStop.
Some of the avid Reddit users have shared screenshots of their brokerage accounts, showing monstrous returns from trading in GameStop and other names.
“The action in the GameStop action is a game of musical chairs and my advice to investors is to sell before the music stops,” said David Trainer, CEO of New Constructs. “As fickle as the trading crowd has been to picking GameStop as one of their favorite stocks, they could be just as fickle about when to drop the stock.
The Reddit crowd has started targeting other highly courted names, including Bed Bath & Beyond and AMC Entertainment.
AMC soared 300% on Wednesday alone, bringing its weekly rally to over 450%. In the previous session, over 1 billion shares changed hands in AMC, marking its highest volume day on record. Bed Bath & Beyond is also up 75% this week. The duo dipped slightly into pre-market trading on Thursday.
The extreme speculative behavior of newbie investors baffles many on Wall Street, as growing hedge fund losses could spill over into other areas of the market. Some also believe that this buying frenzy could hurt overall market confidence and destabilize conditions.
The S&P 500 and Dow Jones Industrial Average suffered their biggest loss since October on Wednesday as fad concerns escalated.
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