GameStop Corp. soared Thursday as retail investors revived the surge in Reddit-favorite stocks, pushing it to reap $5.9 billion in market value over two days.
The video-game retailer rose as much as 85% to $170.01 in New York, its highest since Feb. 1, as trading volume soared. Among other favorites of traders populating Reddit forums, AMC Entertainment Inc. advanced 13% after gaining 59% in the first three days of the week, while Koss Corp. surged 64%. Nokia Oyj, also a favorite of the meme crowd, climbed 7.4% in Europe. The meteoric rally in some Reddit-promoted stocks triggered volatility halts in GameStop, Koss and Express Inc.
The surge was initially spurred by a final-hour rally on Wednesday that brought GameStop its biggest advance since Jan. 29, the day Robinhood Markets restricted trading in it and 49 other stocks at the height of the frenzy. An equally weighted Bloomberg basket of those rose more than 5%, the most since late January. The activity inflated trading volumes in the meme stocks and caused an outage on Reddit’s WallStreetBets forum, the hub of the January volatility.
GameStop shares trimmed gains to 23% to $112.98 as of 9:48 a.m. in New York, triggering its third trading halt for volatility of the day. With more than 23 million shares changing hands within the first 15 minutes of the session, the stock was on pace for its most active day since it peaked last month.
Reddit’s hold on early trading was notable with GameStop, movie-theater operator AMC, cannabis company Sundial Growers Inc. and apparel company Naked Brand Group Ltd. the four most active stocks that trade for more than $1.
The sudden revival in left-for-dead stocks recalled an episode last month that captured the attention of Wall Street, regulators and eventually Congress, as members of Reddit’s WallStreetBets forum egged on retail hordes in an attempt to take on professional short sellers.
Various explanations circulated as to what spurred the rallies Wednesday. The GameStop frenzy came after Bloomberg News reported late Tuesday that Chief Financial Officer Jim Bell was pushed out in a disagreement over strategy to make way for an executive more in line with the vision of activist investor and board member Ryan Cohen, the co-founder of online pet-food retailer Chewy.com. His addition to the board in early January underpinned the first flurry of moves in the stock after capturing the attention of WallStreetBets.
According to Neil Wilson, chief market analyst for Markets.com, the sudden surge in GameStop late Wednesday might have been triggered by a tweet from Cohen, who posted a picture of a McDonald’s Corp. ice cream at 1:57 p.m. New York time, about two hours before the U.S. cash equity close.
— Ryan Cohen (@ryancohen) February 24, 2021
“Does it signal Cohen will fix the company the way McDonald’s finally fixed its ice cream machines?,” Wilson wrote in a note. “Or could it be even more cryptic and related to a new website that tells you in real time whether your local McDonald’s has a functioning ice cream machine? Who knows, stranger things have happened. It looks like the Reddit crowd are at it again.”
GameStop’s rally triggered gains for the SPDR S&P Retail exchange-traded fund. The ETF, which has historically been a barometer for chains like Macy’s Inc. and Dick’s Sporting Goods Inc., rose as much as 4.3% Thursday morning after surging the most since Jan. 29 on Wednesday.