Individual investors who recently piled into GameStop Corp. are taking a victory lap this week after shares of the struggling company surged more than 90% in the last two days, putting the stock on pace for its best weekly performance on record.
For weeks, members of Reddit’s popular WallStreetBets forum have been touting GameStop, encouraging others to scoop up shares lof the videogame retailer and begin making bullish bets. Several posts on the forum had noted that short sellers’ bearish GameStop bets had been at elevated levels.
Short interest, which indicates the interest of investors betting a stock will fall in value, has hovered around 138% of the stock’s free float this year, FactSet data show. This makes it the second-most shorted company across the New York Stock Exchange and Nasdaq Inc., according to Dow Jones Market Data. That had some Reddit users predicting that the stock might rapidly rise if short sellers suddenly had to cover their bets by buying back shares should the stock suddenly rise in value.
This week, that forecast finally appeared to take shape after news of changes to GameStop’s board sent shares climbing.
On Monday, the company said it had struck a deal to add Chewy Inc. co-founder Ryan Cohen and two former executives to the GameStop board.