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GameStop’s shares rose again in premarket trading Wednesday, and continued the stock’s wild swings when several high profile short sellers said they had pulled out of their positions.
The stock traded at around $ 217 per share at 8:24 a.m. ET, up 47% in premarket trading. Shares rose to $ 360 per share early Wednesday morning.
The most recent surge came when some of GameStop’s well-known short sellers, including Melvin Capital and Citron, announced that they had filled most or all of their positions.
The stock lost some of its premarket gains after the short sellers made their announcements, leaving it unclear whether their surrender would bring more profit for the stocks or mark the start of a turnaround as the stock fueled its fuel through so-called short squeezes loses.
GameStop’s almost vertical surge over the past week has occurred as retailers, many of whom have documented their moves on social media website Reddit, topped up on stock and call options. The rising stock price has contributed to a stock squeeze that forces short and options traders to buy stocks of a rising stock to cover their positions, creating a feedback loop that drives the stock even higher.
The stock appeared to be getting a boost in expanded trading on Tuesday after Tesla CEO Elon Musk tweeted the link to the Reddit board where much of the discussion took place.
The video game retailer, which had a market cap of less than $ 4 billion late last week, was the most traded stock in the market yesterday, according to Jim Reid, strategist at Deutsche Bank.
GameStop’s rapid surge has drawn comparisons to speculative trading during the tech bubble in the late 1990s and prompted many Wall Street veterans to warn investors about the potential for substantial losses.
Hedge fund manager Michael Burry, who said he held 1.7 million shares at the end of September, said in a now-deleted tweet that the surge was “unnatural, crazy and dangerous”. Burry told Bloomberg News that he is not currently long or short in the stock.
William Galvin, Massachusetts’ top securities regulator, told Barron’s that GameStop trading “systemically wrong. ”
Bank of America raised its target price on the stock to just $ 10 per share on Wednesday, saying in a notice to clients that the increased stock price could support GameStop’s turnaround plans but it poses a risk to investors.
“While it is difficult to know how much very high short interest and retail ownership … could continue to put pressure on stocks, we believe fundamentals will once again affect valuation,” the press release said.
The Securities and Exchange Commission declined to comment on CNBC.
– CNBC’s Michael Bloom contributed to this story.