Patrick T. Fallon Bloomberg | Getty Images
Shares of GameStop rose again in pre-trading on Wednesday, continuing a series of wild swings for shares, as several well-known short sellers said they had retreated from their positions.
The stock was trading at about $ 375 per share at 9:24 a.m. ET, up 154% from pre-trade.
The latest move comes as some of GameStop̵
The stock lost some pre-market profits after the short sellers made their announcements, but the stock recovered to new highs shortly before the market opened.
GameStop’s near-vertical jump in the past week came when retailers, many of whom documented their moves on social media site Reddit, piled up stock and call options. The rising stock price has helped create stocks in which shorts and options dealers are forced to buy shares of rising stocks to cover their positions, leading to feedback that drives stocks even higher.
Shares seem to have gained momentum in expanded trading on Tuesday after Tesla CEO Elon Musk wrote on Twitter about the link to the Reddit board, where much of the discussion took place.
The video game retailer, which had a market capitalization of less than $ 4 billion at the end of last week, was the most traded shareholder in the market yesterday, according to Deutsche Bank strategist Jim Reed.
GameStop’s rapid rise has made comparisons to speculative trading during the tech bubble in the late 1990s, prompting many Wall Street veterans to warn investors of the potential for significant losses.
Hedge fund manager Michael Burry, who said he held 1.7 million shares at the end of September, said in a now-deleted tweet that the rise was “unnatural, insane and dangerous”. Bury also told Bloomberg News that there is no current long or short position in the shares.
William Galvin, Massachusetts’ chief securities regulator, told Barron’s that the GameStop trade could be “systematically wrong.”
Bank of America raised its share price to just $ 10 a share on Wednesday, saying in a note to customers that the increased share price could help GameStop’s turnaround plans, but poses a risk to investors.
“While it is difficult to see how very high short-term interest rates and retail ownership … may continue to put upward pressure on stocks, we believe the fundamentals will again take the valuation into account,” the note said.
The Securities and Exchange Commission declined to comment to CNBC.
– Michael Bloom of CNBC contributed to this story.