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Summary
- GameStop stock has risen 89% since last Friday at US$137.74 to end at US$260 yesterday.
- Online discussion and interest concerning the stock are still incredibly high, arguable more than in February when the stock hit its peak.
- AMC Entertainment is also retaining interest, up 27% this week so far.
GameStop Corp (NYSE:GME) is up 89% this week so far. The stock has traded relatively flat since mid-Wednesday after it dropped 40% within half an hour from US$330 to US$250.
On 11 March, GameStop shares were at US$260, decreasing 1.89% from previous close. Thursday was the first day since 2 March that the stock did not close higher than its opening price.
Source: © Brodogg1313 | Megapixl.com
The mechanisms driving the interest in GameStop can be hard to discern. A variety of causes have been pointed to by analysts, including short squeezes, gamma squeezes, c-suite shake-ups, pump and dump schemes, and retail investors simply liking the stock.
Interest In GameStop Remains High
Regardless of the mechanisms driving interest in the stock, interest in GameStop has hardly waned since its record high of US$347 in January. The stocks high on Wednesday trading was only few dollars shy of the peak price reached in the January mania.
Arguably, interest has remained more reliable than in January. The stock has experienced incremental daily rises for the past month and less unpredictable bursts and dips seen in February.
Discussion of the stock online has also increased. The online community that instigated the mania, r/wallstreetbets, is now rated as the most active Reddit community. Its 9.5 million members, up from 2 million members in February, contribute more than 10,000 comments per day and 8,000 posts.
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GameStop Gamma Squeeze
The new mechanism thought to be contributing to the interest in GameStop is a Gamma Squeeze. As the price of the stock increases, many call options taken on the stock become in-the-money.
Buyers of the call options would trigger the contract, forcing the contract seller to buy the stock at the market price and deliver it to the contract buyer. This action drives demand for the stock and further increases the price.
AMC Entertainment Up 27%
Source: © ColleenMichaels | Megapixl.com
GameStop’s short-squeeze brethren AMC Entertainment Holdings Inc (NYSE:AMC) has also had an interesting week. AMC has been up by 27% between last Friday’s closing price till yesterday. On 11 March, AMC Entertainment shares were at US$10.28, increasing 4.37% compared to its last close.
