GameStop extended its sudden resurgence Thursday as day traders took cues from cryptic Twitter messages and a short-seller report to jump back into the stock.
The video-game retailer rose as much as 85% to $170.01, before paring the gain to 55%. This comes after more than doubling in the final 90 minutes of trading on Wednesday. Other favorites of traders populating Reddit forums also soared, having fallen far from the highs of last month’s buying frenzy.
Analysts cited a Tweet by activist investor and GameStop board member Ryan Cohen posted shortly before the stock started surging on Wednesday, suggesting Reddit traders may see it as a message to resume buying. A report from Citron Research suggesting the company purchase Esports Entertainment Group to pivot away from its declining retail business provided a further catalyst.
GameStop’s wild ride added $6.5 billion in market value over two days as bouts of volatility led to trading halts across Reddit-favorite stocks. GameStop shares were halted at least four times, while Koss and Express also experienced one each.
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Among other favorites of traders populating Reddit forums, AMC Entertainment advanced 12% after gaining 59% in the first three days of the week, while Koss surged 61%. Nokia Oyj, also a favorite of the meme crowd, trimmed gains to 2.5% in U.S. trading.
Citron’s suggestion on the potential for GameStop to purchase Esports also drew attention to GameStop. The short-seller set a share price target of $50 for Esports, which gained as much as 39% to $24.48, the highest since November 2017.
GameStop’s rally was initially spurred by a final-hour rally on Wednesday that brought the stock its biggest advance since Jan. 29, the day Robinhood Markets restricted trading in it and 49 other stocks at the height of the frenzy.
The sudden revival in left-for-dead stocks recalled an episode last month that captured the attention of Wall Street, regulators and eventually Congress, as members of Reddit’s WallStreetBets forum egged on retail hordes in an attempt to take on professional short sellers.
Various explanations circulated as to what spurred the rallies Wednesday. The GameStop frenzy came after Bloomberg News reported late Tuesday that CFO Jim Bell was pushed out in a disagreement over strategy to make way for an executive more in line with the vision of activist investor and board member Ryan Cohen, the co-founder of online pet-food retailer Chewy.com. His addition to the board in early January underpinned the first flurry of moves in the stock after capturing the attention of WallStreetBets.
According to Neil Wilson, chief market analyst for Markets.com, the sudden surge in GameStop late Wednesday might have been triggered by a tweet from Cohen, who posted a picture of a McDonald’s ice cream at 1:57 p.m. New York time, about two hours before the U.S. cash equity close.
— Ryan Cohen (@ryancohen) February 24, 2021
“Does it signal Cohen will fix the company the way McDonald’s finally fixed its ice cream machines?,” Wilson wrote in a note. “Or could it be even more cryptic and related to a new website that tells you in real time whether your local McDonald’s has a functioning ice cream machine? Who knows, stranger things have happened. It looks like the Reddit crowd are at it again.”
GameStop’s rally triggered gains for the SPDR S&P Retail ETF. The ETF, which has historically been a barometer for chains like Macy’s and Dick’s Sporting Goods, rose as much as 4.3% today after surging the most since Jan. 29 on Wednesday.
— Additional reporting by Sarah Ponczek, Katie Greifeld and Phil Serafino
