- GameStop stock surged in premarket trading on Monday, topping $100. The stock was quick to surpass $150 as soon as trading started, more than double Friday’s $65 close.
- GME has been popular with retail investors for months, even though the stock was being shorted by most professionals in the business.
- The news that Chewy’s co-founder and former CEO Ryan Cohan has joined GameStop’s board further fueled online chatter, with investors on Reddit having focused on driving up GameStop stock for the past few days.
GameStop (GME) is the hottest stock right now, with a massive “army” of internet-driven retail investors taking advantage of an incredibly rare scenario that’s driving up the stock price. GME closed at $65 on Friday after reaching a high of almost $77 in intraday trading that was halted a few times. The figures are all the more impressive when you consider that trading started at around $42 on Friday morning, nearly $30 higher than the average price target of analysts. Monday premarket trading saw the stock soar past $100. GME quickly shot past $150, with many fans expecting it to reach new highs as the short squeeze continues.
Today's Top Deal %title% List Price:%original_price% Price:%price% You Save:%discount_amount% (%discount_percent%) Available from Amazon, BGR may receive a commission Available from Amazon BGR may receive a commission
“The sudden, sharp surge in GameStop’s share price and valuation likely has been fueled by a short squeeze, given the high short interest, and, to a lesser degree, speculation by retail investors on forecasts for the new gaming cycle and the involvement of activist RC Ventures,” Telsey analyst Joseph Feldman said in a note on Monday. “We believe the current share price and valuation levels are not sustainable, and we expect the shares to return to a more normal/fair valuation driven by the fundamentals,”
GME has been a popular short target on Wall Street, with more than 138% of its float shares having been borrowed and sold short. But an army of investors who can quickly jump into the stock market with apps like Robinhood has been on a GME buying spree for months, with social networks like Twitter and Reddit fueling the action.
On January 11th, news broke out that Ryan Cohen is joining GameStop’s board. Cohen is the co-founder and former CEO of Chewy, which he sold to PetSmart in April 2017 for $3.35 billion. The news that Cohen joined a company that analysts had no faith in further drove the GME rally to new highs.
The increasing valuation of GameStop forced some of the short sellers to buy GME shares to hedge their short losses. In turn, this increased demand further drove up the price of GME. More interest from the wallstreetbets subreddit is believed to have contributed to the spectacular performance of the GME stock over the past few days.
A quick glance at Reddit would easily bring up posts showing the interest in GameStop over the last few weeks, as well as reports from retail investors ready to “YOLO” the stock without any regard for potential losses. One of the posts published on the subreddit early on Monday before trading is titled “IM NOT SELLING THIS UNTIL AT LEAST $1000+ GME 🚀🚀🚀🚀🚀🚀 BUCKLE THE F**K UP.”
At the time of this writing, GME topped $150, and the day is far from over. The stock might come crashing down at some point, but there’s no stopping it for the time being, as the short squeeze is still very much in play.