GameStop skyrockets 55% as Reddit-fueled rally enters 3rd week
Carlo Allegri/Reuters
- GameStop soared as much as 55% as retail traders continued to defy short-sellers and boost shares.
- Day traders and Reddit users have pushed the rally into its third week, cheering gains and urging one another to keep buying.
- Citron Research had predicted shares would crater to $20, but the forecast only emboldened bullish retail traders.
- Watch GameStop trade live here.
GameStop surged as much as 55% on Monday as online traders’ obsession with the video-game retailer overshadowed concerns about overstretched valuations.
The gains followed a 51% jump on Friday, when outsized volatility prompted numerous trading halts. GameStop’s early-Monday jump set it up for a third consecutive day of double-digit returns and brought its extraordinary upswing into its third week.
What began as an update to the retailer’s board has exploded into the latest example of an internet-fueled momentum trade. Day traders looking to extend the company’s rally have populated online forums with calls to buy more shares and avoid selling. Members of the WallStreetBets subreddit have led the charge, and posts cheering on the rally were among Reddit’s most popular throughout the weekend.
GameStop closed at $65.01 on Friday, up 238% year-to-date. Shares nearly doubled in the past week alone as more retail investors joined in.
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The stock’s unrelenting climb hasn’t been without its doubters. The short-selling firm Citron Research on Thursday laid out a handful of reasons it expected GameStop shares to crash to $20, such as the company’s reliance on retail locations and steadily declining sales.
The firm also criticized the bullish online traders’ enthusiasm about the speculative trade.
“The amount of people who are so passionate about putting GameStop higher not based on any fundamentals – it just shows the natural state of the market right now,” Andrew Left, the managing partner at Citron Research, said in a video.
WallStreetBets members quickly united against Left and his bearish outlook. The managing partner tweeted on Friday that because of online harassment and hacking, he would no longer comment on GameStop. He added that though an “angry mob” of online traders drove him away, he maintained his short position.
The stock’s gains through January represent arguably the most successful Reddit-fueled momentum trade yet, and Wall Street hasn’t adjusted its forecasts in response to the phenomenon. GameStop has two “buy” ratings, two “hold” ratings, and one “sell” rating from analysts, but its median price target of $7.75 remains 88% below the company’s closing level on Friday.
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