The frenzied rally around GameStop (NYSE:GME) stock continues as retail investors pushed the share price above $350 U.S. in pre-market trading.
The stock’s price has now risen more than 400% in January, giving the brick-and-mortar video game retailer a market value greater than many members of the S&P 500 index, including Marathon Oil.
GameStop’s market value has now topped $10 billion U.S., up from just $1.3 billion U.S. at the start of the year. The stock’s surge has, in large part, been fueled by an army of Reddit-charged day traders who used the website "WallStreetBets" forum to pump up shares and fight back against the huge levels of short sellers, which has held steady at about 140% of the float, according to data compiled by S3 Partners.
Short bets by Melvin Capital and Citron Research have faced a reckoning in the battle with GameStop’s retail fans. Melvin Capital announced Wednesday morning that it had gotten out of the stock and has taken a huge loss on GameStop but refused to say exactly how much money it lost on the stock.
Hedge fund titans Ken Griffin and Steve Cohen boosted Melvin Capital earlier in the week, injecting a total of $2.75 billion U.S. into the firm after it lost about 30% of its capital on GameStop and other short bets.
Options trading on GameStop stock has also surged with retail investors ramping up bets on even more upside. The most active contracts were $115 U.S. calls that are set to expire on Friday, while $200 U.S. calls were the second most active contract.
Despite the surge in GameStop’s share price, most analysts say the stock has a true value of about $20 U.S. a share or less. Some analysts have compared the video game retailer to "Blockbuster Video" and say the company has an outdated business model given that video game sales are increasingly moving online.
