GameStop Value Surges Past $10 Billion as Shares Nearly Double
(Bloomberg) -- The skyward march in GameStop Corp. accelerated Tuesday, its stock nearly doubling during exchange hours and then surging another 50% after being name checked in a tweet by Elon Musk. Its market value flew past the $10 billion mark via a year-to-date rally that is pushing 700%.
Thanks to the gain, GameStop is now worth more than 10% of S&P 500 stocks including American Airlines Group Inc., Under Armour Inc. and Invesco Ltd. It started the year with a market capitalization of $1.2 billion. Shares of the U.S. company listed on German exchange Tradegate gained 106% to $306 in early trading on Wednesday compared with Tuesday’s U.S. closing price of $147.98.
Euphoria born in day-trader chat rooms has turned GameStop into the biggest story stock of the retail era, its improbable surge an emblem of the newfound power of individual investors. At the same time, it’s become a major headache for institutional investors betting it would fall. The epic short squeeze lifting its shares has set off a search for other companies that might be similarly vulnerable.
Earlier this month, traders piled into GameStop after activist investor and Chewy Inc. co-founder Ryan Cohen joined its board. The rally has also in part been fueled by Reddit-charged day traders who used the website’s WallStreetBets forum to pump up shares and fight back against the huge levels of short interest, which has held steady at about 140% of the float, according to data compiled by S3 Partners. Short bets by Gabe Plotkin’s Melvin Capital and Andrew Left’s Citron Research have faced a reckoning in the battle with GameStop’s retail fans.
Better-known names jumped in Tuesday with venture capitalist Chamath Palihapitiya pushing the gains higher during trading hours after tweeting about buying calls. Elon Musk later tweeted a link to a Reddit thread about the company.
GameStop surged as much as 68% in extended hours, climbing past $240 a share at one point after soaring 93% during the regular trading day.
Hedge fund titans Ken Griffin and Steve Cohen boosted Melvin Capital, according to a statement on Monday, injecting a total of $2.75 billion into the firm after it lost about 30% this year. The capital infusion came after Melvin Capital, which started the year with about $12.5 billion in assets, saw short bets, including GameStop, go awry, people familiar with the firm said.
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