The WallStreetBets forum on the Reddit Inc. website on a laptop and the GameStop logo on a smartphone were arranged in Hastings-On-Hudson, New York, USA on Friday, January 29, 2021.
Tiffany Hagler-Geard | Bloomberg | Getty Images
GameStop shares rose in pre-market trading on Monday as the Reddit short squeeze on hedge funds on Wall Street is expected to continue.
The stationary video game retailer’s shares rose roughly 6.5% in early pre-market deals, with the stock rising 1,625% in January.
The astronomical rally has caused hedge funds short of the stock a market value loss of nearly $ 20 billion, according to S3 Partners. However, many short sellers hold onto their bearish positions.
Robinhood and other trading apps continue to restrict purchases of GameStop stock and options contracts and other heavily truncated names after a week of highly volatile trading due to a retail frenzy spearheaded by 5 million Reddit threads “WallStreetBets”. “”
Restrictions also apply to AMC Entertainment, BlackBerry, Koss, Express, Nokia, Genius Brands International and Naked Brand Group.
Short selling is a strategy in which investors borrow shares of a stock at a certain price, with the expectation that the market value will drop below that level when it is time to pay off the borrowed shares.
– CNBC’s Yun Li contributed to this report.