GameStop Corp. (GME) shares rose nearly 60% on Tuesday, adding to a meme-fueled rally that sent the video game retailer’s shares up 74% in the previous day’s trading.
The rise in GameStop shares was accompanied by a surge in AMC (AMC) shares. The movie theater chain operator’s shares rose about 30% after soaring 120% early Tuesday.
In a filing with the SEC, AMC disclosed that it issued about 72.5 million new shares last session, raising about $250 million for the company.
Other stocks that were heavily shorted on Tuesday that rose included SunPower (SPWR), up 63%, Beyond Meat (BYND), up 25%, and The Children’s Place (PLCE), up about 6%.
GameStop shares surged as much as 110% in yesterday’s trading following the re-emergence of Keith Gill, also known as “Roaring Kitty,” whose bullish claims against GameStop sparked a rally in the meme stock in 2021.
The company’s shares had been flat this year before Monday’s surge but had risen about 60% over the past month. Excluding Tuesday’s gains, GameStop shares are up more than 180% in the past month.
Nicholas Colas, co-founder of DataTrek Research, wrote in a client note that the recent trading action “feels like an echo of early 2021, when this account facilitated a vicious short squeeze in GameStop.”
Colas noted that the stock price decline in 2021 has been much larger than the movements seen so far this time around, with GameStop shares rising 1,500% in January 2021 before giving up most of those gains since.
But the pain short sellers experienced during the initial meme-stock rally three years ago hasn’t deterred them from betting against these companies.
Short interest in GameStop shares has remained high since the meme rally, accounting for about 24% of shares outstanding, according to data from S3 Partners.
Short sellers on GameStop lost about $900 million on Monday, before losing $1.36 billion on Tuesday.
“We continue to see squeeze-related short covering due to the resurgence of meme trading.” Igor Dusaniwski said:Managing Director of S3 Partners.
In Colas’s view, traders shorting stocks that are rising in this aggressive manner have only one option: “Liquidate your position, regardless of price.”
“In the case of GME, there is also concern that retail investors will find themselves in a similar situation to what happened in 2021,” Colas added.
A screen displaying the GameStop Corp. logo and trading information is displayed on the floor of the New York Stock Exchange (NYSE) in New York City, US, March 29, 2022. REUTERS/Brendan McDiarmid (REUTERS/Reuters)
The meme craze three years ago garnered national attention and drew large numbers of retailers during pandemic lockdowns.
The story continues
“2021 has been pretty much a transformative year, bringing tens of millions of people back into the markets, but I look at this very differently than 2021,” said Tom Sosnoff, CEO of options and futures trading platform TastyLive.
Still, YouTuber Matt Coles, a past investor in GameStop and AMC, said the crucial aspect of the 2021 short squeeze — “small investors vs. large investors” — still applies in today’s rally.
“There’s a perception that the entire system is structured and insulated to benefit powerful elites, and GME is the symbol of a populist movement against that notion,” Coles said.
“The only real change I see from a psychology standpoint is that we’re no longer confined to our homes,” he added.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on Twitter. Follow.
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