GameStop Corp.’s wild ride continued in premarket trading as the stock swung after reports that Melvin had Capital closed its short position.
Shares were up 66% to $ 245 as of 6:37 a.m. New York time, having more than doubled previously from the last close of $ 147.98. That followed Tuesday’s 93% rise, meaning GameStop is up more than eightfold this month in a dizzying rally sparked by Reddit-charged day traders.
After a frenzied session on Tuesday, stock price gains reached new extremes outside of regular hours after Tesla Inc. chief Musk tweeted a link to a Reddit thread about the company. Famous fund manager Michael Burry warned that the manic rally has gotten out of hand, calling the stock’s rise “unnatural, insane and dangerous”. Gabe Plotkin’s Melvin Capital closed its short position, CNBC’s Squawk Box, on Tuesday afternoon reported.
Another warning was issued Wednesday by analysts from Bank of America Corp. While they raised their price target from $ 1.60 to $ 10 to reflect the stock’s recent gains, they have noted that GameStop is in “a weaker, not a stronger place” and reiterated their underperforming recommendation.
“While it is difficult to know how much very high short-term interest rates and retail holdings could continue to put upward pressure on equities, we think fundamentals will once again play a role in valuation,” analysts led by Curtis Nagle wrote in a note . “We remain skeptical of the potential for a turnaround.”
Born in chat rooms for day traders, Euphoria has turned GameStop into the largest story stock of the retail era, the unlikely wave of an emblem of the renewed vigor of individual investors. At the same time, it has become a major headache for institutional investors who bet it would fall. An epic short squeeze in which the shares were lifted has sparked a search for other companies that may be equally vulnerable, with Express Inc., Bed Bath & Beyond Inc. and AMC Entertainment Holdings Inc. between the shares. rising premarket trading on Wednesday.
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– With the assistance of Jan-Patrick Barnert
(Updates with Melvin closing short second and third paragraph positions, Bank of America target in fourth)