GameStop Fizzles After Dizzying Rise in Volatile Trading


© Reuters.

.com — GameStop Corp (NYSE:GME) soared on Monday, and the were intermittently halted in volatile Monday morning trading, marking a dizzying and perplexing ride higher.

Shares of the video game retailer have doubled in a week. It is the most heavily shorted in the U.S, with more than 138% of its shares sold short, according to CNBC. GameStop shares gained more than 140% in morning trading on Monday and then fell, turning negative briefly. They were last up about 11% for the day.

Earlier this month, GameStop said Chewy Inc (NYSE:CHWY) co-founder and former CEO Ryan Cohen would join its board, fueling hope he would push for a change in strategy. That news forced fierce buying in the stock as hedge funds and other traders tried to cover their short bets. The shares are up 2,962% over one year.

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On Monday, Telsey Advisory Group downgraded its rating on the shares to underperform from outperform, citing the sharp run-up.

“The sudden, sharp surge in GameStop’s share and valuation likely has been fueled by a short squeeze, given the high short interest, and, to a lesser degree, speculation by retail ,” the firm said. “We believe the current share price and valuation levels are not sustainable.” GameStop shares were trading around $96.



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