A man rides his bike in front of GameStop at 6th Avenue on February 25, 2021 in New York.
John Smith | Corbis News | Getty Images
The GameStop story added another wild chapter on Wednesday as the retailer’s stock popped 40% before quickly falling back to earth. The move appeared to be on no new headlines.
The stock rose as high as $348.50 per share on Wednesday, topping its record closing high from Jan. 27. The shares were then paused for volatility by the exchange. However, the shares lost all of those gains in a rapid decline around 12:30 p.m. ET.
The shares were last down 12% at just under $200 per share and halted once again for volatility.
The stock, which rose dramatically in January as retail traders bid up the stock to create a short squeeze, was given a boost recently when the company announced that Chewy founder Ryan Cohen would lead a committee to help GameStop transition to e-commerce.
GameStop was the headliner of a group of heavily shorted stocks that were targeted by retail traders on Reddit earlier this year. Short selling is a strategy in which investors borrow shares of a stock at a certain price on hopes that the market value will fall below that level. If the shares rise instead, the short sellers are forced to buy the stocks and cover their positions, creating a feedback loop known as a short squeeze.
The January surge above $300 per share for GameStop forced brokerages including Robinhood to limit trading in heavily shorted stocks,
