Shares in GameStop rose as much as 130% higher early on in Wednesday’s pre-market, after billionaire Elon Musk tweeted “Gamestonk!!” in after-hours trading.
“Stonks” is usually used in investing banter on social media for widely-held stocks.
The Tesla founder posted a link to the popular subreddit WallStreetBets, members of which have piled into GameStop’s soaring stock.
Billionaire Chamath Palihapitiya also joined the Reddit frenzy by excitedly announcing he bought 50 call options in GameStop with a strike price of $115 and an expiration date of February 19.
Scores of WallStreetBets users have driven the video-game retailer’s stock to record highs, while targeting short-sellers like Gabe Plotkin’s Melvin Capital and Maple Lane Capital.
The online stock-investing chat group now has over 2.4 million members. Their battle against institutional short-sellers on GameStop has led to an eye-popping 750% rally in 2021 as retail traders grabbed the opportunity to make money off a short squeeze of institutional investors.
Insider’s Bradley Saacks and Alex Morrell reported the subreddit added over 25,000 users in the past 24 hours, according to a metadata dashboard run by itself, indicative of how rapidly the group has become the talk of the finance world. “These are not normal times and while the r/wallstreetbets thing is fascinating to watch, I can’t help but think that this is unlikely to end well for someone,” said Jim Reid, a managing director of cross-asset research at Deutsche Bank.
Legendary investor Michael Burry criticized retail investor behavior on Tuesday for working to boost GameStop’s stock and target Wall Street shorts, calling it “unnatural, insane, and dangerous.”
GameStop shares closed $147.98 a share on Tuesday but were last trading 58% higher around $228 per share as of 6:50 a.m. ET, having earlier risen by as much as 130% to $335