GameStop Corp (NYSE:GME) shares were back in the spotlight once again as the price of the stock surged overnight amid a renewed frenzy of trading activity.
Shares in the video game retailer ended Wednesday’s session up 103.9% at US$91.71 overnight, echoing a similar surge in January sparked by retail traders of the Reddit forum r/wallstreetbets.
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Last month’s frenzy, which saw the price of GameStop stock soar around 1,914% from around US$17.25 at the start of January to a closing high of US$347.51 on January 27 before suffering a sharp decline.
The buying activity appeared to be driven by a desire of a large group of retail traders to inflict massive losses on several hedge funds that had taken out large short positions on GameStop, however as the rally escalated numerous trading apps such as Robinhood blocked traders from purchasing shares in the company as their balance sheet came under strain amid an influx of orders.
Yesterday’s also saw share price boosts for other stocks associated with the initial trading frenzy, with shares in cinema chain AMC Entertainment Holdings Inc (NYSE:AMC) closing up 18% at US$9.09 while BlackBerry climbed 8.9% to US$11.32.
However, the cause behind this latest surge for GameStop has so eluded analysts, although the rally could be connected to a recent board reshuffling at GameStop, including the resignation of its chief financial officer on Tuesday, amid an ongoing transformation at the firm spearheaded by activist investor Ryan Cohen, who bought a major stake in the company last year.
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It may be even less complicated than that, with Cohen tweeting a picture of a McDonald’s ice cream cone on Wednesday evening accompanied by a frog emoji, which was interpreted by some to be a signal that he was aiming to fix GameStop’s business in a similar manner that the fast-food giant fixed its ice-cream machines, the frequent breaking of which was a popular internet meme.
— Ryan Cohen (@ryancohen) February 24, 2021
Whatever the reason for the surge, a repeat of January’s frenzy could be back on the cards for the market as the wallstreetbets crowd shows signs of throwing another brick through the financial world’s window.
The upward trend was continuing in pre-market trading in New York on Thursday, with GameStop shares rising 42% at US$130.59.