GameStop stock (GME) rose as much as 118% in premarket trading on Tuesday, adding to Monday’s rally that sent the video game retailer’s stock up 74%.
Monday’s move saw the stock rise as much as 110% and was halted several times during the trading session due to volatility, but also as a “Roaring Kitty” bullish incident in GameStop ignited a meme stock rally. It followed the re-emergence of the well-known Keith Gill. Back in 2021.
GameStop shares had been flat this year before Monday’s rally, but were up about 60% in the past month. GameStop stock is now up more than 180% from last month, excluding Tuesday’s pre-market gains.
GameStop’s gains on Monday were also accompanied by gains in AMC (AMC), which rose nearly 80%. AMC was also up Tuesday, rising more than 120% in premarket trading.
Datatrek Research co-founder Nicholas Colas said in a note to clients on Tuesday that this recent trading activity “feels like an echo of early 2021, when this account fueled GameStop’s vicious short squeeze. ” he wrote.
Collas noted that the movement dating back to 2021 is much larger than anything seen so far this time around, with GameStop shares rising 1,500% in January 2021, but losing most of that gain since then.
But the pain endured by short sellers during the first meme stock rally three years ago hasn’t deterred them from betting on these companies. Interest in shorting GameStop remains high since that meme rally, with 24% of the float sold short as of Monday, according to data from S3 Partners.
Ihor Dusaniowski, managing director at S3 Partners, told Yahoo Finance on Monday that GameStop shorts have reduced their month-to-date losses in May by more than $1.3 billion after Monday’s rally.
That number is set to rise further after a spike early on Tuesday.
In Collas’ view, this type of aggressive move leaves traders shorting rising stocks with only one option: “close out the position, regardless of price.”
“In the case of GME, we are also concerned that retail traders could be tempted by a repeat of 2021,” Colas added.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on Twitter @ines_ferre.
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