- AMC stock surged as much as 182% in premarket trading on Wednesday.
- Day traders also sent GameStop shares up as much as 132%, and BlackBerry and Bed Bath & Beyond up about 30%.
- Amateur investors are targeting heavily shorted stocks to make quick profits and squeeze short-sellers.
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AMC shares skyrocketed as much as 182% in premarket trading on Wednesday as day traders piled into heavily shorted stocks for a third consecutive day.
Amateur investors have gathered, most notably on Reddit forum r/wallstreet bets, to pinpoint stocks they can buy en masse and score fast profits. They frequently target stocks that are popular shorts, as driving their stock prices up can pressure short-sellers into buying shares back to cover their positions, which sends prices even higher.
Day traders also see the strategy as a way to stick it to Wall Street. They have targeted hedge funds such as Melvin Capital, which had negative positions in 17 US-listed stocks at the last count. Four of those – GameStop, Bed Bath & Beyond, Dillard’s, and Ligand Pharmaceuticals – jumped at least 10% in premarket trading on Wednesday.
The GameStop frenzy is especially divisive. Billionaire investor Chamath Palihapitiya bought bullish options on the video-game retailer’s stock on Tuesday at the urging of his Twitter followers, while Tesla CEO Elon Musk tweeted the word “GameStonk!!” with a link to the Wall Street Bets subreddit.
In contrast, Michael Burry of “The Big Short” fame condemned the frenzied buying of GameStop stock as “unnatural, insane, and dangerous” in a swiftly deleted tweet on Tuesday. The investor, who has likely made a fortune on GameStop, also called for legal and regulatory action against those involved.