If you thought the GameStop (GME:NYSE) saga was over, then think again. Shares in the Texas-based computer games seller surged 100% overnight on Wall Street in what could be a sign January’s Reddit-inspired trading frenzy might be returning.
The pop in GameStop’s shares arose entirely in the final hour and a half of trading in the US amid heavy volume. Trading in GameStop was halted twice and the move spread to other names that were part of the recent Reddit frenzy including AMC Entertainment, which rocketed 18% higher on exceptionally high volumes.
GameStop shares rose another 83% in after-hours trade to $168, having started the session at $44.70.
Heavy buying of bullish call options may have exaggerated the move, although the spike may have been triggered by a tweet from activist investor Ryan Cohen, who posted a picture of a McDonald’s ice cream a couple of hours before the US cash equity close.
‘Does it signal Cohen, the founder of Chewy.com and leading investor in GameStop, will fix the company the way McDonald’s finally fixed its ice cream machines?’, wonders Neil Wilson, Chief Market Analyst at Markets.com.
As Shares has previously discussed, the action started when GameStop was targeted for a short squeeze by the ‘Wallstreetbets’ Reddit forum, whose sights were trained on hedge funds betting on further declines for the share price.
As the shares stormed higher, several platforms including Robinhood controversially introduced temporary trading restrictions on this and other Wallstreetbets targets like cinema operator AMC Entertainment and Blackberry.
The euphoria by US retail investors over certain stocks has raised concerns that we are in the final stages of a stock market bubble.