GameStop climbs 8% in volatile premarket trading as Reddit traders dig in

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  • Shares of the bricks-and-mortar video game retailer surged 1,625% in January and 400% just last week, as traders led by Reddit thread WallStreetBets piled into the stock.
  • But the momentum collapsed earlier this week.
  • Gamestop stock dropped 60% on Tuesday and it has lost more than 70% of its value since Friday.

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GameStop shares were flat in premarket trading on Wednesday as traders waited to see if the short squeeze fueled by retail investors on Reddit could be revived.

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The stock had been down by more than 11% earlier on Wednesday morning but swung into the black shortly after 5 a.m. ET. The stock was last trading around the flatline at $91.44.

Shares of the bricks-and-mortar video game retailer surged 1,625% in January and 400% just last week, as traders led by Reddit thread WallStreetBets piled into the stock.

But the momentum collapsed earlier this week. Gamestop stock dropped 60% on Tuesday and it has lost more than 70% of its value since Friday.

Keith Gill, AKA Reddit’s DeepF——Value, posted on Tuesday that he is still not selling despite suffering a $13 million loss that day.

AMC Entertainment, another heavily shorted stock that was also targeted by Reddit traders, was up by around 6% in premarket trading.

Robinhood and other retail trading apps continue to limit some buying of a collection of stocks pursued by the Reddit thread. Many Wall Street hedge funds began short-covering toward the end of last week after taking significant losses in the squeeze.

Short selling is a strategy in which investors borrow shares of a stock at a certain price on expectations that the market value will fall below that level when it’s time to pay for the borrowed shares. Buying back borrowed shares to close out a short position, whether for a profit or loss, is known as short-covering.

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