Individual investors who recently piled into GameStop Corp. are taking a victory lap this week after shares of the struggling company doubled in the last two days, putting the stock on pace for its best weekly performance on record.
For weeks, members of Reddit’s popular WallStreetBets forum have been touting GameStop, encouraging others to scoop up shares of the videogame retailer and begin making bullish wagers. Several posts on the forum had noted that short sellers’ bearish GameStop bets had been at elevated levels.
Short interest, which indicates the interest of investors betting a stock will fall in value, has hovered around 138% of the stock’s free float this year, FactSet data show. This makes it the second-most-shorted company by that metric across the New York Stock Exchange and the Nasdaq, according to Dow Jones Market Data. That had some Reddit users predicting that the stock might rapidly rise if short sellers had to cover their bets by buying back shares should the stock suddenly increase in value.
This week, that forecast finally appeared to take shape after news of changes to GameStop’s board sent shares climbing.
On Monday, the company said it had struck a deal to add Chewy Inc. co-founder Ryan Cohen and two former executives to the GameStop board.
