GameStop Corp. is worth more than $10 billion for the first time in its history thanks to a battle between short sellers and traders that gather on an internet message board, and could be headed for $15 billion thanks to Elon Musk.
GameStop GME shares rose 92.7% Tuesday, pushing the company’s market capitalization to $10.3 billion. GameStop was briefly worth $10 billion in late 2007, according to FactSet records, but surpassed that level for the first time with Tuesday’s close.
After the close, Tesla Inc.’s
chief executive tweeted about the stock and the Reddit message board that is behind the big push higher, and shares jumped more than 50% in after-hours trading. Musk’s tweets moving the market are not new: Etsy Inc.
shares moved higher early Tuesday after Musk tweeted about a present he bought for his dog on the site, and after Tesla’s CEO advised followers to use the Signal messaging service earlier this month, an unrelated stock with a similar name soared.
Musk reached a settlement with the Securities and Exchange Commission in 2018 after being accused of manipulating markets by tweeting about a supposed deal to take Tesla private. A subsequent tweet led to a second settlement and further restrictions.
That was just a capper on another violently volatile day for the stock, with trading halted five times Tuesday after being paused nine times during Monday’s session, when shares more than doubled to an all-time intraday high of $159.18 before closing up 18.1% at $76.79. At Tuesday’s closing price, GameStop shares have increased 278% in the past four trading session combined.
Read also: How an options-trading frenzy is lifting stocks and stirring fears of a market bubble
GameStop has been a darling of Reddit message board WallStreetBets, where hundreds of posters have been pushing for purchases of the stock after investors betting against the chain pushed short interest to more than 100%. On Tuesday morning, high-profile investor Chamath Palihapitiya publicly joined the party by purchasing call options that were in the money after the day’s second sudden spike higher.
For more: Reddit moderator slams Wall Street ‘fat cats’ as GameStop’s wild ride continues
Short sellers have targeted GameStop stock as the pandemic added to issues with sales moving online. Noted short seller Andrew Left of Citron Research released a video late Thursday outlining points on why GameStop should be a $20 stock, then pulled back and claimed he and his family had been threatened. Shares began rallying mid-month with a 57% surge on Jan. 13, with five out of the next seven trading days logging daily gains of 10% or more despite a disappointing preliminary earnings report from the retailer.
GameStop has not released any news to coincide with the spike, and has not responded to a request from MarketWatch to comment. The Securities and Exchange Commission declined to comment on Monday about any potential investigations into the trading.
Don’t miss: How you could lose everything by short selling stocks, whether it’s betting against GameStop or Tesla
Earlier this month, GameStop admitted that holiday-quarter sales had dropped more than 25% and come in lower than expectations. Over the past two quarters, losses for the company have widened significantly, following its April 2020-ending quarter when GameStop reported an adjusted loss of $1.61 a share versus the 7 cents a share in earnings it had reported in the previous year’s quarter.
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