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Individual investors who have recently crammed into GameStop Corp. clinch a victory lap this week after the struggling company’s shares jumped more than 90% in the past two days, putting the stock on pace with its best-ever weekly performance.
For weeks, members of Reddit’s popular WallStreetBets forum have been touting GameStop, encouraging others to collect shares of the video game retailer and start making bullish bets. Several posts on the forum noted that bearish bets on GameStop by short sellers had been at high levels.
Short interest, which indicates the interest of investors betting a stock will fall, has hovered around 138% of the stock’s free float this year, according to FactSet data. This makes it the second most shorted company on the New York Stock Exchange and Nasdaq Inc., according to Dow Jones Market Data. This has led some Reddit users to predict that the stock could rise quickly if short sellers suddenly had to hedge their bets by buying back stocks if the stock suddenly rose in value.
This week, that prediction finally seemed to take shape after news of GameStop’s board changes sent stocks soaring.
On Monday, the company announced that it had reached a deal to add Chewy Inc. co-founder Ryan Cohen and two former executives to GameStop’s board.
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