Shares in GameStop, which was at the heart of the so-called
"stonks" retail trading mania earlier this year, have risen by a
third in the last one week, while shares in cinema operator AMC are up 39
percent.
Ortex said short interest in AMC is currently estimated to
be 18.3 percent of freefloat and in GME it is estimated at 21.8 percent of
freefloat.
Yesterday alone, short-sellers lost over $200 million each
in both of those stocks, Ortex data shows. GameStop closed 13 percent higher at
$180.6, the highest level since April 30.
Earlier this month, an analysis by Massachusetts-based
cybersecurity company PiiQ Media showed that Bots on major social media
websites have been hyping GameStop and other "meme stocks," although
the extent to which they influenced prices was unclear.
"You might be able to make some quick trading money and
it could be a lot of money, but in the end, it's the greater fool theory,"
said Eric Diton, president and managing director at The Wealth Alliance in New
York. The theory refers to buying stocks that are over-valued, anticipating a
"greater fool" will buy them later at a higher price.
Analysts mostly ruled out a short squeeze like the one that
fueled GameStop's rally in January, when individual investors using Robinhood
and other apps punished hedge funds that had bet against the stock, forcing
them to unwind short positions. Many GameStop buyers took their cues from
online investment forums on Reddit and elsewhere.
Options market activity in GameStop, which has returned to
the top of the list in a social media-driven retail trading frenzy, suggested
investors were betting on higher prices, higher volatility, or both.
Refinitiv data showed retail investors have been buying deep
out-of-the-money call options, which have contract prices to buy far higher
than the current stock price.
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