Ramin Talaie | Bloomberg | Getty Images
GameStop rallied again, hitting $ 450 apiece in Thursday’s premarket as Reddit-powered retail momentum continued to heat up.
Shares of the physical video game seller managed to reverse losses during overnight trading, with the latter rising 31% to $ 451.10 in premarket trading. The move followed a rally of more than 130% in heavy volume on Wednesday, taking the week’s increase to 466% so far. The stock was still worth about $ 40 a week ago.
GameStop has been a red hot target in the “Wallstreetbets” Reddit chat room, where an army of private investors gathered at home to push stocks higher and squeeze out short-selling hedge funds. The forum, which now has more than four million members, briefly went private on Wednesday night because the moderators said they “were unable to guarantee Reddit’s content policies.”
A trending post on Thursday said, “Don’t fear the drop in $ GME $ BB. Hedge funds trade after hours to scare you guys … KEEP BUYING AND HOLDING.” The post quickly generated more than 1,000 responses within an hour.
Another top post in the community said “buy high, never sell,” with a photo from GameStop.
Some of the passionate Reddit users have shared screenshots of their brokerage accounts, showing monstrous returns from trading GameStop and other names.
“The action in GameStop’s stock is a game of musical chairs and my advice to investors is to sell before the music stops,” said David Trainer, CEO of New Constructs. “As fickle as the trading team has been in selecting GameStop as one of their favorite stocks, they could be just as fickle to get the stock down.”
Reddit audiences began to turn to other heavily abbreviated names, including Bed Bath & Beyond and AMC Entertainment.
AMC shot up 300% Wednesday alone, pushing the weekly rally to over 450%. In the previous session, more than a billion shares in AMC changed hands, marking the highest volume day on record. Bed Bath & Beyond is also up 75% this week. The duo fell slightly in the premarket trade on Thursday.
The extreme speculative behavior among first-time investors makes many on Wall Street nervous, as mounting losses from hedge funds can spill over to other parts of the market. Some also believe this shopping frenzy could hurt overall market confidence and destabilize conditions.
The S&P 500 and Dow Jones Industrial Average took their biggest losses since October on Wednesday as concerns about the mania intensified.
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