GameStop surges over 150% in pre-market trading as meme stock mania returns; short sellers may lose up to $2.5 bn

The video game retailer’s stock witnessed heavy volatility in pre-market as price fluctuated between a jump of 100 percent to a peak of 160 percent.

The shares of GameStop and AMC Entertainment recorded huge pre-market gains on May 14, a day after the stock market witnessed the revival of meme stocks following a social media post by ‘Roaring Kitty’.

A meme stock refers to the shares of a company that has become popular on social media platforms due to heightened social sentiment.

The video game retailer’s stock witnessed heavy volatility in pre-market as price fluctuated between gains of 100 percent to a peak of 160 percent. At 17:44 pm IST, the stock was trading at $64.31, up by 111.2 percent. The stock had closed $30.45 on Monday, recording a massive gain of 74.4 percent.

Another meme stock AMC Entertainment, a movie theatre chain, has skyrocketed 105.59 percent in pre-market rally to $10.67. The stock had closed at $5.19 on May 13, higher by 78.35 percent.

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Despite the rally, the stocks remain below the highs achieved during the retail frenzy in 2021.

However, short sellers of GameStop are likely to lose $1.2 billion on May 14 at a stock price $48.75 pre-market, according to Ortex, a global financial analytics firm. With the stock gains on Tuesday, the short sellers are projected to lose over $2.5 billion so far in May.

The video game retailer’s stock is also set to open above $40 for the first time since August 2022.

The meme stock frenzy returned on May 13 after Keith Gill, popularly known as Roaring Kitty, returned to social media after a gap of three years. Gill posted an image that shows a man sitting on a chair, leaning forward with a gaming console in hand. The meme was interpreted as “when things get serious”, according to Know Your Meme, an internet meme database.

GameStop is now ranked as the second-most traded stock by retail investors for out of the money call option volumes on May 13, said Giacomo Pierantoni, head of data at Vanda Research.

With inputs from Bloomberg