GameStop’s meteoric rise continued overnight, as late trading drove up the price of the video game retailer by over $100. As Wall Street prepares for another wild day of trading, GameStop‘s stock rose as high as $450 a share before the opening bell. That is another significant increase in the retailer’s stock price, which closed at $347.51 a share. The jump in price was due to after-hours trading that typically takes place on private trading systems. The stock seems poised to be at the center of another trading hurricane driven between a fierce push and pull by individual investors organized through Reddit and powerful hedge funds.
GameStop’s stock price has risen by about 466% since the beginning of the week and has become the center of the biggest story in finance. While stock prices rise and fall due to many circumstances, GameStop’s stock (and that of several other companies, such as AMC and BlackBerry) were driven up by a group of investors on /r/WallStreetBets, a Reddit community that discusses stock purchases and sales with heavy meme-usage. GameStop’s stock was chosen to create a “short squeeze,” a market phenomenon that occurs when the price goes up on a stock that has been heavily shorted. When a stock trader “shorts” a stock, they are essentially betting that the price of that stock will go down by borrowing a stock and selling it and then attempting to re-purchase that stock at a lower price.
As more and more individual investors and traders jumped onto the GameStop bandwagon, the stock gained attention from unexpected sources. While some financial professionals called for an investigation as to whether the squeeze amounted to illegal market manipulation, the White House noted that they were monitoring the GameStop situation. Other politicians, such as Alexandria Ocasio-Cortez, seemingly came out in support of the /r/WallStreetBets community, pointing out the double standard of brokers complaining about a loosely organized group of individuals gaming Wall Street when many traders had done so for decades with much more dire consequences to the middle class.
GameStop’s stock price will likely be one of the most watched stories today, as thousands of investors balancing holding their stock and sending the price “to the moon” or cashing out before the stock plummets. The price will very likely experience some major fluctuations throughout the day, as not everyone is willing to hold in an attempt to drive up its price.
Meanwhile, GameStop has yet to comment on its unexpected stock rally, nor have they announced any plans to capitalize on the attention or potential windfall.
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