(Bloomberg) — GameStop Corp. mania was reignited Monday after the video-game retailer tapped Chewy Inc. founder and activist investor Ryan Cohen to helm its e-commerce business shift.
The stock surged as much as 53% to $210.87, the highest in five weeks, as amateur traders pushed the stock higher for a fourth day. The rally came after the Grapevine, Texas-based company said Cohen would spearhead a new committee to help the transition to e-commerce.
While the latest push from Cohen spurred retail investors to pile into the stock, some skeptics like Wedbush analyst Michael Pachter argued that the update was expected. He said he didn’t “see anything new there at all.”
Instead, the stock’s position as a “Reddit Raider favorite” likely spurred the rally, according to Pachter. “And it appears shorts can’t help themselves, they keep piling on,” he said by email.
GameStop shares trimmed their gains to 29% at 2:11 p.m. in New York. With the stock trading at $177.14, it remained on pace for its best close since Feb. 1.
The follow-through from Cohen comes after a pair of tweets from the investor spurred a wave of trading in the past two weeks. Most recently, shares spiked on Thursday after Cohen tweeted an apparent screenshot from a Pets.com television ad. A picture of an ice cream cone tweeted by Cohen on Feb. 25 helped spark a massive rally, with the stock doubling at one point during the session.
Monday’s rally came despite short interest being near the lowest level in at least a year. Roughly one-quarter of shares available for trading are currently sold short, according to data compiled by S3 Partners. That compares to a peak of more than 140% in January.
“Shorts will continue to be squeezed out of their positions as GameStop’s stock price continues to trend upwards,” said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.
Shorts sellers are down nearly $6 billion in year-to-date mark-to-market losses, including $609 million in Monday’s trading alone, Dusaniwsky said by email.
GameStop’s market value jumped to $12.8 billion as retail investors praised Cohen’s move on social media sites like Twitter and Reddit. The swing in the retailer’s size is still a far cry from the $33.7 billion value it hit on on Jan. 28 when it briefly became the largest company in the Russell 2000 Index.
GameStop’s rally has the stock on pace for a fourth day of gains, which has resulted in a 55% climb for the retailer compared to the broader market’s roughly 0.3% decline. Monday’s jump came as trading volume roared back. With more than 50 million shares changing hands by 2 p.m., volume was more than double what had been seen in the past week.
(Updates with analyst commentary starting in third paragraph, adds latest share movement in fifth, and short interest data in seventh.)
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