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February 25, 2021

GameStop starts to surge once more, exciting Reddit investors

By MarketLine

In the final hours of trading on Wednesday 24th of February GameStop shares began to surge again and closed out the day at 104% higher than Tuesday’s closing price.

GameStop, the darling stock of subreddit Wall Street Bets is on the move again. After a remarkable period for the share price in January, culminating in an all-time high of $347 from a price of $20 earlier in the month, trading has been more subdued and the price remained at $40 early on Wednesday 24th.

In the final 90 minutes of trading the stock suddenly started to move significantly, easily doubling in price before the close of trading the same day. This is certainly not going to be an isolated incident and with premarket trading over night the price is now expected to open at $168.

Almost without question we can now expect another rally on this stock as retail investors start to pile in. The belief, certainly within Reddit circles is that the hedge funds which had previously over-shorted GME are still heavily over-short the stock and with enough price movement, another short squeeze could be triggered.

Whilst Melvin Capital and Citron Research were some of the losers from the first rally, there are still a significant number of others which remain short at present and retail investors may be taking aim at these hedge funds again. What can be expected is a significant period of volatility, but whether Robin Hood can again deploy purchasing limits to protect itself remains to be seen.

What caused this Gamestop surge at this particular moment is unknown

There have been a number of news sources for GME investors in recent days which might have triggered the jump from the congressional hearing at which the chief architect of the GME investment strategy “Roaring Kitty” acquitted himself well to the resignation of the incumbent GME CFO and the dressing down of RobinHood by members of congress including Alexandria Occasio-Cortez.

There events might have given investors renewed confidence, but it appears to be a spontaneous event birthed out of improved moral from those that are still holding the share price after the first set of rallies in January.

The subreddit Wall Street Bets has remained alive with activity and discussion about the stock continued on that platform despite the recent downturn in share price. Analysts have noted that there has been a sudden purchasing of aggressive call options, which are aiming for a strike price of $500.

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