Tiffany Hagler-Geard | Bloomberg | Getty Images
GameStop shares rose 11% in premarket trading Wednesday as the short squeeze fueled by retailers on Reddit appears to be recovering after a sharp drop.
The stock had fallen more than 11% earlier Wednesday morning, but moved into the black shortly after 5 p.m. ET.
Shares of the physical video game retailer were up 1,625% in January and 400% last week, as traders led by Reddit thread WallStreetBets stacked the shares.
But momentum had waned earlier this week. Gamestop shares fell 60% on Tuesday and have lost more than 70% of its value since Friday.
AMC Entertainment, another heavily shorted stock that was also targeted by Reddit merchants, was up about 4% in premarket trading.
Robinhood and other retail trading apps continue to limit the buying of a collection of stocks pursued by the Reddit thread. Many Wall Street hedge funds started shorting late last week after taking significant losses during the squeeze.
Short selling is a strategy where investors borrow shares of a stock at a specified price in the expectation that its market value will fall below that level when it comes time to pay for the borrowed shares. Buying back borrowed shares to enter into a short position, whether for profit or loss, is known as short hedging.