Why has Gamestop (NASDAQ: GME) gone up? An ExplanationYou may have seen this story overnight. A stock called Gamestop (NASDAQ: GME) listed in the US was up 92% yesterday to $147 and is up to $236 in after-hours trade. They are calling it "Won't Stop" on the online forums. This is the explanation from one of the Newswires in the US – “A squeeze in a number of heavily shorted stocks, attributed to retail investors coordinating online forums like wallstreetbets on Reddit, has largely continued today. Some of the notable gainers as of late have included GameStop, Bed Bath & Beyond, BlackBerry, AMC Entertainment, SunPower and National Beverage. The outsized rallies, which have been fuelled by record bullish bets in the options market, have pushed 50 most-shorted stocks on Russell 3000 to 33% gain MTD, on pace for best month since at least 2008. Record short squeeze continues to receive lot of attention in the press at a time when a number of other market developments have also raised concerns about bubble-like conditions. However, most of the factors cited have been around for a while. These include government stimulus checks, more time at home due to the pandemic, free trading on online brokerage platforms, the heightened influence of narrative-driven investing, a fear of missing out (FOMO), and the broader central bank liquidity tailwind.”
It raises a few concepts:
- One we already know - That the pandemic has created a swathe of traders stuck at home using stimulus money to speculate in the stock market for short term gains.
- Another we already know – that the most shorted stocks can move fast, reverse quickly, are more volatile. A good hunting ground for traders in the short term. You can make a lot of money fast if you catch/create the turning point.
- A newer one - That smaller retail investors are beginning to successfully co-ordinate in online forums and manipulate share prices. In the US online share market groups like "Wallstreetbets" and "Stocktwits" (see HENRYS TAKE) boast nearly 500,000 more tech-savvy members, hell-bent on pumping stocks and "gamifying" the market.