Those betting on GameStop stock’s price decline, or short-sellers, lost around $1.9 billion in just two days as the Reddit crowd’s favorite “meme stock” renewed its enormous rally.
Shares of the video game retailer skyrocketed over 100 percent on Wednesday, with the enormous volatility even prompting trading halts. The sudden rally brought $664 million in mark-to-market losses for investors betting against GameStop, according to financial analytics firm S3 Partners.
The frenzied buying continued on Thursday, with GameStop stock surging as high as 84 percent in intraday trading and closing with 19 percent gains. Thursday’s intraday moves booked another $1.19 billion in losses for short-sellers, S3 Partners’ calculations show.
As of Friday morning, GameStop’s shares were slightly up again in pre-market trading. Given the latest gains in GameStop stock, short-sellers’ year-to-date mark-to-market losses now amount to $10.75 billion, according to the analytics firm. However, even billions in losses don’t stop investors from further betting on the company’s decline, with the number of GameStop shares shorted over the past week rising by 15 percent to 1.97 million.
The latest surge is nothing like the market mayhem we saw in January when shares of the retailer jumped around 1,800 percent at some points. The trading frenzy was fueled by retail investors based on Reddit, including the now-notorious WallStreetBets group, who declared a full-fledged war on big Wall Street sharks. Those small investors gobbled up GameStop shares, pushing its price to historic highs and forcing a short squeeze on big hedge funds that had to cover the negative bets or face massive losses.
The Reddit crowd also bought other stocks, also called “stonks” or “meme stock,” including theater operator AMC, telecom company Nokia and smartphone maker turned security services vendor BlackBerry.
The so-called “meme-trading” drew the attention of politicians and regulators. Last week, lawmakers on the House Financial Services Committee questioned top executives of companies that played a role in the GameStop saga, including the head of Robinhood, the app which was at the epicenter of the trading frenzy and restricted trading in volatile shares.
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