Patrick T. Fallon | Bloomberg | Getty Images
GameStop’s shares rose again on Wednesday, continuing the series of violent swings, with several high-profile short sellers saying they had withdrawn from their positions.
The shares traded at about $ 308 per share shortly after the market opened, up more than 100% since Tuesday’s close and giving the company a market value of $ 21 billion. The shares reached $ 380 per share in the pre-market.
The most recent bullish move came when some of GameStop’s high-profile short sellers, including Melvin Capital and Citron, announced that they covered most or all of their positions.
The shares lost some of their pre-market earnings after short sellers made their announcements, but the shares rebounded to new highs just before the market opened.
GameStop’s near-vertical rise last week came with retail traders, many of whom documented their changes to the social media site Reddit, accumulating stocks and call options. The rise in stock prices helped to create stock compression, where sellers and options traders are forced to buy rising stock shares to cover their positions, resulting in a feedback loop that takes stocks even further to up.
The shares appeared to have a boost in the extended negotiations on Tuesday after Tesla CEO Elon Musk tweeted the link to the Reddit board, where much of the discussion took place.
The video game retailer, which had a market capitalization of less than $ 4 billion at the end of last week, was the most traded share in the market yesterday in value, according to Deutsche Bank strategist Jim Reid.
GameStop’s rapid rise attracted comparisons with speculative trading during the technology bubble of the late 1990s and prompted many Wall Street veterans to alert investors to the potential for significant losses.
Hedge fund manager Michael Burry, who reported owning 1.7 million shares at the end of September, said in a now-excluded tweet that the increase was “abnormal, insane and dangerous”. Burry also told Bloomberg News that he did not have a long or short position at the moment.
William Galvin, the main securities regulator in Massachusetts, told Barron’s that trading on GameStop could be “systematically wrong”.
Bank of America raised its target price to just $ 10 a share on Wednesday, saying in a note to customers that the stock price hike could help GameStop’s recovery plans, but it posed a risk to investors .
“While it is difficult to know how much high short-term interest and retail property … can continue to put upward pressure on stocks, we believe the fundamentals will again influence the valuation,” the note said.
The Securities and Exchange Commission declined to comment to CNBC.
– Michael Bloom of CNBC contributed to this story.