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GameStop shares rose again in premarket trading on Wednesday, continuing the series of wild fluctuations for stocks, while several high-profile sellers said they withdrew from their positions.
Shares traded at about $ 375 a share at 9:24 a.m. ET, up 154% in premarket trading.
The latest biggest move comes when some of GameStop’s high-profile short sellers, including Melvin Capital and Citron, announced that they had covered most or all of their positions.
The shares lost some of their pre-market gains after the short sellers made their announcements, but the shares returned to new highs shortly before the market opened.
GameStop’s near-vertical rise in the past week has come as retailers, many of whom have documented their moves on the social networking site Reddit, have piled up in stock and call options. The low stock price has helped create a reduction in shares, where dealers of shorts and options are forced to buy shares of a rising stock to cover their positions, resulting in a feedback loop that increases the stock even above.
The action appears to be gaining momentum in extended trading on Tuesday, after Tesla CEO Elon Musk sent the link to the Reddit board on Twitter, where much of the discussion took place.
The video game retailer, which had a market capitalization of less than $ 4 billion at the end of last week, was the most traded stock on the market yesterday, according to Deutsche Bank strategist Jim Reid.
The rapid growth of GameStop has made comparisons with speculative trading during the technology bubble of the late 1990s and has led many Wall Street veterans to warn investors about the potential for significant losses.
Hedge fund manager Michael Burry, who reported holding 1.7 million shares at the end of September, said in a now deleted tweet that the growth was “unnatural, crazy and dangerous.” Burry also told Bloomberg News that he does not hold a long or short current position in shares.
William Galvin, Massachusetts’ chief securities regulator, told Barron that trading in GameStop could be “systematically wrong.”
Bank of America on Wednesday raised its share price to just $ 10 per share, saying in a note to customers that the high share price could help GameStop’s rotation plans, but poses a risk to investors.
“Although it is difficult to know how much very short interest and retail ownership … could continue to put upward pressure on equities, we believe that the fundamentals will again consider the valuation,” the note said.
The Securities and Exchange Commission declined to comment to CNBC.
– CNBC’s Michael Bloom contributed to this story.