GME Stock Short Sellers Have Already Lost $1 Billion Today as GameStop Soars

InvestorPlace

May. 13, 2024, 12:55 PM

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Meme stock mania appears to be far from dead. During the last incredible short squeeze cycle, which saw GameStop (NYSE:GME) surge to incredible levels, many retail investors made a killing. Today, GameStop appears to once again be in focus, with GME stock surging more than 75% in early afternoon trading on some interesting news.

GameStock is up on news that Keith Kill, also known as “Roaring Kitty” on his Reddit (NYSE:RDDT) account, has made his first online post in almost three years. This move has also sent Reddit shares higher on the day, currently up just shy of 10% on the news.

Much ado has been made about the linkage between social media activity and the previous meme stock bubble. Let’s examine whether we’re due for a repeat of what we saw in the past or if this recent surge is short-lived.

GME Stock Surges on Roaring Kitty Post

The popular r/WallStreetBets subreddit gained a tremendous amount of attention during the previous meme stock and short squeeze mania of 2021. Investors who followed a number of high-profile accounts, such as that of Roaring Kitty, were rewarded by some rather incredible moves that took months to fully play out. Today’s price action suggests speculators have been awaiting this catalyst and are viewing another potential short squeeze as increasingly likely as retail investors clearly pile into this name today.

Daily trading volume for GameStop shares has hit more than 150 million shares as of 2:30 p.m. Eastern. That’s massive compared to the average trading volume for GME stock, which is around 7 million shares. This move has led short sellers to lose around $1 billion in value today alone, with many speculating more short positions could get unwound, given the current demand for this particular meme stock.

The Roaring Kitty post on social media platform X depicts a meme of a man leaning forward in his seat. While seemingly innocuous, this tweet has clearly been enough to move markets. We’ll have to see if this move can be sustained, but for now, it appears investors have plenty of reason to watch this stock closely.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.