GameStop, the video game retailer that became a household name during the Reddit-fueled stock frenzy earlier this year, is once again making headlines. The company's stock surged an impressive 110% in one day, marking its best performance since 2021.
This sudden surge in GameStop's stock price has left many investors and analysts scratching their heads. Some attribute the rally to renewed interest from retail traders on social media platforms like Reddit and Twitter. Others point to positive news surrounding the company's turnaround efforts and new strategic partnerships.
Monday but the catalyst for the surge happened online.
‘Roaring Kitty’, previously identified as Keith Gill, posted on X/Twitter for the first time since 2021, creating a flurry of activity on Monday.
Meme stock mania appears to be far from dead. During the last incredible short squeeze cycle, which saw GameStop (NYSE:GME) surge to incredible levels, many retail investors made a killing. Today, GameStop appears to once again be in focus, with GME stock surging more than 75% in early afternoon trading on some interesting news.
In late 2020, Gill became renowned for his stock market advice on YouTube and the subreddit Wall Street Bets. In particular, he advised his fellow investors to buy GameStop shares, believing that they were undervalued. Some major Wall Street institutions, conversely, were betting on GameStop to fail, as a declining number of people went to physical stores to buy video games, instead purchasing them online.
Short selling is a strategy in which investors borrow shares of a stock at a certain price in expectations that the market value will fall below that level when it’s time to pay for the borrowed shares.
GameStop was not the only meme stock that was on the rise Monday. AMC jumped 15%, while Reddit traded 9% higher.
“Short sellers may be in for a bumpy and bloody ride in these stocks,” Dusaniwsky said.
Coming into 2021, GME shares had lost a third of their value over the previous five years. Investors betting the stock would fall, the shorts, controlled GME stock shares in late 2019. That overly bearish bet set up a perfect environment for a massive short-squeeze rally.
The entire short squeeze saga was detailed in the movie "Dumb Money."
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