Individual investors who recently settled in GameStop Corp. take a victory round this week after the struggling company’s stock has risen more than 90% in the past two days, putting the stock on track for its best weekly performance ever.
For weeks, members of Reddit’s popular WallStreetBets forum have praised GameStop and encouraged others to pick up shares from the video game store and start bullish betting. Several posts in the forum had noted that short seller’s bearish GameStop bets were at high levels.
Short-term interest rates, which indicate interest from investors betting that a stock will fall in value, hovered around 138% of the stock’s free float this year, data from FactSet shows. This makes it the second most shorted company on the New York Stock Exchange and Nasdaq Inc., according to Dow Jones Market Data. That had led some Reddit users to predict that the stock could rise quickly if short sellers suddenly had to cover their bets by buying back shares if the stock suddenly rose in value.
This week, that prediction finally seemed to be taking shape after news of changes to the GameStop board pushed stocks up.
On Monday, the company said it had struck a deal to buy Chewy Inc. co-founder Ryan Cohen and two former executives to join the GameStop board.