GameStop (GME) stock rose 118% in premarket trading Tuesday, adding to a rally Monday that sent shares of the video game retailer up 74%.
Monday’s move, in which the stock rose as much as 110% and was repeatedly halted for volatility during the trading session, follows the re-emergence of Keith Gill, also known as of “Roaring Kitty,” whose bullish case on GameStop sparked the stock market rally. back in 2021.
GameStop shares had been flat year-to-date before Monday’s rally, but had risen about 60% over the past month. GameStop stock is now up more than 180% in the past month, not including Tuesday’s premarket gains.
Monday’s GameStop gain was also accompanied by a rally in AMC (AMC), which rose nearly 80%.
Early Tuesday, AMC stock was up another 120% in premarket trading. In an SEC filing, AMC also disclosed that it issued approximately 72.5 million new shares, raising some $250 million for the company.
Other stocks that were heavily shorted on Tuesday included SunPower (SPWR), up 55%, Beyond Meat (BYND), up 23%, and The Children’s Place (PLCE), up 10%.
In a note to clients Tuesday, Nicholas Colas, co-founder of DataTrek Research, wrote that this recent trading action “feels like an echo of early 2021, when this account helped fuel a vicious short sale in GameStop.”
Colas noted that the pullback in 2021 was a bit bigger than we’ve seen so far this time around, with GameStop stock rising 1,500% in January 2021 before losing most of those gains.
The pain endured by short sellers during the first stock market rally three years ago, however, has not deterred bets against these companies. Short interest in GameStop has remained high since that same rally, according to data from S3 Partners, with 24% of the float sold short on Monday.
Ihor Dusaniwsky, managing director of S3 Partners, told Yahoo Finance on Monday that GameStop shorts lost more than $1.3 billion in monthly losses in May after Monday’s rally.
Tuesday’s early peak will add to that tally.
For Colas, a trader selling a rising stock with this type of aggressiveness has only one option: “your only choice is to close the position whatever the price”.
“In the case of GME, you also worry that retail traders are getting sucked into a repeat of 2021,” Colas added.
Ines Ferre is a senior economics reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
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