Shares of GameStop (GME.N) and cinema operator AMC Entertainment (AMC.N) rallied to their highest levels in months on Wednesday, with some market watchers saying the recent surge was forcing some bearish investors to unwind their bets against the video game retailer.
GameStop shares surged 17% to $245.01, around its highest level since mid March, while AMC shares shot up 17.6% to $19.30, the highest since Jan. 27.
Shares of GameStop and other companies popular on forums such as Reddit’s WallStreetBets had already been climbing before Tuesday’s late-day surge. GameStop has risen as much as 80% from its May low, while AMC has risen as much as 118%.
The big moves have caused some bearish GameStop investors to retreat from their bets, forcing them to buy shares to cover their loans, said Ihor Dusaniwsky, managing director of predictive analytics at S3.
"We have started to see some short covering in GME as mark-to-market losses mount on the short side," Dusaniwsky said in an email Wednesday.