The screen will display the GameStop logo and transaction information on the floor of the New York Stock Exchange (NYSE) on March 29, 2022.
Brendan MacDermid | Reuters
Two meme stocks soared on Thursday, adding unexpected wrinkles to a market that has been depressed by volatile trading for over a month.
GameStop After jumping over 30% and being stopped many times due to volatility, he ended the session with a gain of 10.1%.Theater chain inventory AMC Entertainment It has risen by more than 8% from a surge of more than 20% at some point.
GameStop and AMC announced earlier last year when a band of private investors coordinated transactions in online chat rooms to create large short squeeze on these stocks, which are widely disliked by hedge funds and other players. I made an appearance. The meteor rally has caused great pain to many hedge funds and other shortsellers involved in these speculative names.
Since then, stock prices have receded from peak prices and shortsellers have begun to re-establish positions. According to FactSet, AMC’s short interest ratio is 19.5%, while GameStop’s short interest ratio is 21.4%. Short selling is a measure of which part of a company’s available stock, the float, is being short sold.
These big bets on the company can lead to dramatic day movements in stocks as hedge funds move to close short positions when stocks rise, thus creating more buying pressure. I have. This process is known as short squeeze.
Despite the big move on Thursday, stock prices are well below their highs since the first half of 2021. GameStop, which rose to $ 483 per share on a daytime basis last January, ended Thursday at $ 89.57 per share.
AMC, which reached a daytime high of $ 72.62 in June last year, closed at $ 11.20 per share on Thursday.
It may be easier to force a new short squeeze, even with a small number of trading shops, or even one large fund, as the company’s market capitalization has fallen sharply.
However, Ihor Dusaniwsky of financial analysis firm S3 Partners said Thursday’s move is likely to cause a short squeeze due to the soundness of the short position.
“These stocks are rampaging, but some shortsellers may have been squeezed out of positions to realize the benefits of recent market valuations, but today’s shortside losses are compared to profits. They made these names last week and a month, which is a drop in buckets. ”
In 2021, both AMC When GameStop We used the temporarily rising stock price to sell additional shares and raise capital. Adam Aaron, CEO of AMC, has put a lot of effort into accepting private investors who attended the rally, answered questions from small traders about the call for profits, and introduced shareholder benefits at the actual cinema. bottom.
AMC used some of the cash it raised to acquire other theaters across the country. But the company also Small gold mine company Earlier this year with an unstable financial history.
— CNBC’s Yun Li contributed to this report.