Wall Street’s mania over GameStop is on again, at least for one afternoon. Shares in the troubled video game company more than doubled Wednesday, Feb. 24, 2021 to $91.71 apiece, the stock’s best day since Jan. 27, when it was going for $347.51 a share. (AP Photo/John Minchillo)

Wall Street’s mania over GameStop is on again, at least for one afternoon. Shares in the troubled video game company more than doubled Wednesday, Feb. 24, 2021 to $91.71 apiece, the stock’s best day since Jan. 27, when it was going for $347.51 a share. (AP Photo/John Minchillo)

GameStop shares double Wednesday after tumbling for much of February

Wall Street’s mania over GameStop is on again, at least for one afternoon

Wall Street’s mania over GameStop is on again, at least for one afternoon.

Shares in the troubled video game company more than doubled Wednesday to $91.71 apiece, the stock’s best day since Jan. 27, when it was going for $347.51 a share.

A rally in GameStop has been rare since it fell back to earth early this month. The stock, which soared 1,600% at one point in January, has been extremely volatile.. It’s down nearly 72% so far in February, though it’s still up nearly 387% this year.

Shares in AMC Entertainment, another stock hyped by online social media forums, jumped 18.1%. The movie theatre chain’s stock is up nearly 60% this month and about 329% this year.

The sudden, sharp move higher in GameStop and AMC Entertainment left even some members of Reddit’s WallStreetBets forum, which helped cheer the stocks’ meteoric rise last month, scratching their heads.

“Can we honestly sound off on what we think is happening?” wrote one Redditor. “Is there any reason for this 150% spike??” asked another.

GameStop’s wild ride shocked Wall Street, forcing the market to gird for more volatility. It prompted Congress to hold a House hearing last week into what led to the frenzy and whether smaller investors need to be shielded from taking big risks.

Individual investors on Reddit and other social media forums encouraged each other to buy GameStop, AMC Entertainment and select other stocks in a bid to hurt hedge funds that were betting the stocks would lose value. The move, known as a “short squeeze,” can lead traders who were using options to bet against a stock to abandon their bets. To do so, they have to buy shares of the stock, which pushes the price even higher.

GameStop was an extreme example because some of its shares had been sold short multiple times.

Gust Kepler, CEO of stocks and options platform BlackBoxStocks, said that he became aware around 3:30 EST Wednesday of “aggressive buying” of call options on GameStop shares. A call option gives a trader the right to buy a stock at a certain price at a later date.

“I am not certain that there’s another short squeeze going on like the one before, however, there are probably some funds who stayed short assuming the dust would settle,” Kepler said.

Another possible reason for GameStop’s sharp move: The Grapevine, Texas, company announced Wednesday that its chief financial officer will be resigning on March 26.

“The CFO exited the company and there’s talk of the company finally transforming from a brick and mortar to deploying their product in a digital way, and this is why we believe the stock shot up at the end of the day today,” Kepler said.

Some of the traders who bid up GameStop’s shares last month cited optimism that new board member Ryan Cohen, the founder of online pet store Chewy, would help turn the struggling retailer’s fortunes around.

The company has been struggling to adapt to the rise of mobile gaming and digital downloads that have rendered its more than 5,000 stores obsolete, even more so during the pandemic.

Some market watchers speculated that GameStop’s surprise reanimation was a reaction to critical comments from Charlie Munger, Warren Buffett’s right-hand man.

Speaking at the annual meeting of Los Angeles Daily Journal Wednesday, the Berkshire Hathaway vice chairman pinned the GameStop stock frenzy on small investors that he said were gambling on the stock market.

“That’s the kind of thing that can happen when you get a whole lot of people who are using liquid stock markets to gamble the way they would in betting on race horses,” Munger said.

The remarks didn’t win Munger many admirers on WallStreetBets. One Redditor posted a chart in the forum showing the spike in GameStop’s shares, adding: “TAKE THAT CHARLIE MUNGER.”

Stocks

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

From now to November, WildsafeBC will be educating the public through its various programs in the community of Bella Coola. (Black Press Media file photo)
Bears are back, and so is WildSafeBC

Rae will be working hard to reach out to community members in new and innovative ways

Bella Coola’s new WildSafeBC co-ordinator, Rae Kokeš, has spent the last 10 years in Africa working in lion, human, conflict, and is a wildlife biologist by trade. (Photo submitted)
From the savannas of Africa to the Bella Coola Valley

New Wildsafe BC coordinator ready to tackle wildlife conflict

RCMP crest. (Black Press Media files)
Stolen truck found broken down on Highway 97C, Williams Lake suspect arrested near Ashcroft

A security guard first noticed the truck, and thought it looked suspicious

This will be the second year the Bella Coola Valley Rodeo won’t take place due to the pandemic. (Michael Wigle file photo)
Bella Coola Valley Rodeo cancelled for 2021

Club organizers say next year’s rodeo will be bigger and better than ever

(The Canadian Press)
Trudeau won’t say whether Canada supports patent waiver for COVID-19 vaccines

‘Canada is at the table to help find a solution’

Pieces of nephrite jade are shown at a mine site in northwestern B.C. in July 2019. THE CANADIAN PRESS/HO-Tahltan Central Government MANDATORY CREDIT
Indigenous nation opposes jade mining in northwestern B.C.

B.C.’s Mines Act requires operators to prepare a plan to protect cultural heritage resources

The body of Brenda Ware, 35, was found along Highway 93 in Kootenay National Park on Thursday, May 6, 2021. (RCMP handout)
RCMP ask for tips after woman’s body found in Kootenay National Park

Brenda Ware was found along Highway 93 in the park, 54 kilometres north of the town of Radium

People pass the red hearts on the COVID-19 Memorial Wall mourning those who have died, opposite the Houses of Parliament on the Embankment in London, Wednesday, April 7, 2021. On May 3, the British government announced that only one person had died of COVID-19 in the previous 24 hours. THE CANADIAN PRESS/AP-Kirsty Wigglesworth
For a view of a COVID-19 future, Canadians should look across the pond

Britain, like Canada, is one of the only countries in the world to delay second doses for several months

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Edmonton Oilers’ Connor McDavid (97) celebrates his 100th point this season with Leon Draisaitl (29) against the Vancouver Canucks during second period NHL action in Edmonton on Saturday, May 8, 2021.THE CANADIAN PRESS/Jason Franson
Edmonton superstar McDavid hits 100-point mark as Oilers edge Canucks 4-3

NHL scoring leader needs just 53 games to reach century mark

Nuns of Mother Teresa’s Missionaries of Charity, carry some of her relics during a vigil of prayer in preparation for the canonization of Mother Teresa in the St. John in Latheran Basilica at the Vatican, Friday, Sept. 2, 2016. In which city did she do much of her charitable work? (AP Photo/Gregorio Borgia)
QUIZ: How much do you know about these motherhood issues?

In honour of Mother’s Day, take this 10-question quiz

Most Read