GameStop shares crash after 41-percent surge in wild trading session
GameStop’s shares have not climbed this high since the last week of January.
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GameStop shares tried to hang onto a sixth straight day of gains Wednesday as the mother of all meme stocks took investors on yet another wild ride.
The video-game retailer’s stock price exploded as much as 41 percent to $348.50, a level not seen since the unprecedented retail trading frenzy that shook Wall Street in late January.
But the rally suddenly collapsed around midday as the shares fell more than 40 percent from the session high in just about half an hour. The choppy action stabilized somewhat in the early afternoon, putting GameStop up about 7.6 percent at $265.73 as of 1:49 p.m.
The volatile trading sparked a frenzied discussion on Reddit’s WallStreetBets forum, home to the army of rookie traders that helped push GameStop as high as $483 in January.
Users on a GameStop-focused comment thread speculated that short-sellers were behind the sudden plunge while defiantly pledging to hang onto the stock.
“I think that big dip left a couple of wrinkles in my brain. My hands are shiny diamonds now and my balls have grown 3 sizes,” wrote one Redditor named DrFreeze. “Diamond hands” is WallStreetBets slang for holding a stock regardless of the risks or potential losses.
If GameStop can end Wednesday in the green, the Texas-based company will have posted its longest winning streak in six months.
Its recent surge hearkened back to the January rally that battered hedge funds with bets against the struggling retailer, drew the attention of regulators and forced Robinhood and other discount brokerages to restrict trading on GameStop.
It’s also ginned up fresh euphoria around GameStop on WallStreetBets, which has grown to 9.5 million members and spawned book and movie deals.
One user named jmanpc claimed he’d promised some pals that he would eat a green crayon if GameStop’s share price hit $250. After it crossed that level in after-hours trading Tuesday, he posted a video of himself making good on his pledge — then washing down the crayon with a White Claw hard seltzer — that received nearly 30,000 “upvotes” on the site.
GameStop’s rally picked up steam Monday and Tuesday after the chain confirmed it had tapped Chewy.com founder Ryan Cohen to spearhead its shift into e-commerce. Many Reddit traders — including Keith Gill, also known as “DeepF—ingValue” — view Cohen as a key to the company’s turnaround.
GameStop wasn’t the only so-called meme stock to go through wild price swings Wednesday.
Shares of beleaguered cinema chain AMC Entertainment jumped nearly 19 percent to $12.47 but were recently down about 1.5 percent. And headphone maker Koss posted a gain as large as 126 percent after tumbling 5 percent the prior session.
Stocks favored by small-time traders could get a further boost after Americans get their $1,400 stimulus checks. A recent Deutsche Bank survey of retail investors found that half of those aged 25 to 34 plan to spend 50 percent of their government payments on stocks, according to CNBC.
With Post wires