GameStop shares, which doubled their value on Wednesday, hit $160 at Thursday’s open. Before being halted after several minutes of trading, it fell to $129 before the second half. The stock closed for the day at $108.73 for an 18.5 per cent gain, after soaring almost 90% at the session peak.
Other ‘stonks’ or ‘meme stocks’ popular on sites such as Reddit’s WallStreetBets also saw their rallies fade. Headphone company Koss Corp closed up a 16.8 per cent gain after rocketing nearly 61 per cent during the session. AMC Entertainment ended down nearly 9 per cent after jumping more than 15 per cent during the session.
The number of GameStop shares shorted stood at 15.47 million, analytics firm S3 Partners said. Short interest accounted for 28.4 per cent of the float, compared with a peak of 142 per cent in early January.
Investing legend Charlie Munger, a longtime business partner of Warren Buffett, criticized the risky trading strategies employed by some traders on Reddit. “It’s really stupid to have a culture which encourages as much gambling in stocks by people who have the mindset of racetrack bettors,” said Munger, Berkshire Hathaway’s vice-chairman.
Former GameStop short-seller Citron Research said the company should buy online gambling company Esports Entertainment Group Inc.