Tiffany Hagler-Geard | Bloomberg | Getty Images
GameStop shares were flat in premarket trading on Wednesday as traders waited to see if the short squeeze fueled by retail investors on Reddit could be revived.
The stock had been down by more than 11% earlier on Wednesday morning but swung into the black shortly after 5 a.m. ET. The stock was last trading around the flatline at $91.44.
Shares of the bricks-and-mortar video game retailer surged 1,625% in January and 400% just last week, as traders led by Reddit thread WallStreetBets piled into the stock.
But the momentum collapsed earlier this week. Gamestop stock dropped 60% on Tuesday and it has lost more than 70% of its value since Friday.
Keith Gill, AKA Reddit’s DeepF——Value, posted on Tuesday that he is still not selling despite suffering a $13 million loss that day.
AMC Entertainment, another heavily shorted stock that was also targeted by Reddit traders, was up by around 6% in premarket trading.
Robinhood and other retail trading apps continue to limit some buying of a collection of stocks pursued by the Reddit thread. Many Wall Street hedge funds began short-covering toward the end of last week after taking significant losses in the squeeze.
Short selling is a strategy in which investors borrow shares of a stock at a certain price on expectations that the market value will fall below that level when it’s time to pay for the borrowed shares. Buying back borrowed shares to close out a short position, whether for a profit or loss, is known as short-covering.
