Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
GameStop Corp. (NYSE: GME) shares surged more than 90% in premarket trading on May 14, 2024, following a remarkable 74.4% increase from the previous close on May 13.
The stock closed at $30.45 on May 13, marking the highest price in recent months and a significant deviation from the 52-week high of $38.20 and the recent low of $9.95 in the last three years. The all-time intraday high for GameStop shares was $120.75 in January 2021, with an all-time closing high of $86.88 on January 27, 2021.
Short sellers have been hit hard by the recent surge in GameStop stock prices. Estimated losses for short sellers amounted to $868 million as of May 13, 2024. These losses increased to $1.26 billion for May, with an additional $1.04 billion incurred early on May 14, pushing total monthly losses to over $2.3 billion so far.
The Return of the Meme Stock Craze
The current surge in GameStop shares is linked to the resurgence of the meme stock phenomenon reminiscent of the events that unfolded in 2021. The rally was triggered by a social media post from Keith Gill, also known as Roaring Kitty or DeepF*ckingValue, who posted for the first time in three years on the social media platform X (formerly known as Twitter). Gill’s post included a meme indicating serious gaming, viewed over 23 million times so far.
Retail investors have been highly active on social media platforms like Reddit (NYSE: RDDT), piling into GameStop stock and call options. The increased activity from retail traders has played a significant role in driving up the stock price.
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GameStop’s Short Interest Near 25% of the Free Float
GameStop’s short interest has neared 25% of the free float, the highest level since 2022. The combination of the price increase and high short interest levels signals potential further buying pressure as short sellers begin closing their positions to minimize losses.
The current rally closely echoes the 2021 saga, where retail investors drove up the prices of previously undervalued stocks. Although GameStop stock has been trending lower in recent years, the renewed interest from retail investors has led to a resurgence in its market performance.
Do you think GameStop will set a new ATH? Let us know in the comments below.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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