GameStop stock exploded once again Wednesday as Elon Musk added more fuel to an unprecedented rally that’s forced a beaten-up hedge fund to completely abandon its bet against the retailer.
Shares in the video-game chain more than doubled at one point in premarket trading after the billionaire Tesla boss tweeted a link to the Reddit message board that’s been pumping the stock.
“Gamestonk!!” Musk wrote on Twitter shortly after Tuesday’s closing bell, which saw GameStop end the day up nearly 93 percent at $147.98 — more than seven times its value less than a month ago.
The shares briefly climbed above $300 early Wednesday before sharply paring the gains to trade up about 66 percent at $244.51 as of 7:26 a.m.
GameStop has become a cause célèbre on Reddit’s r/wallstreetbets forum, where retail traders have reportedly railed against investors who bet against the company by taking short positions in the stock.
Their brute-force efforts appear to be working — hedge fund Melvin Capital closed out of its GameStop short as it “repositioned our portfolio over the past few days,” a spokesperson told The Post on Wednesday.
Reddit’s r/wallstreetbets forum has seemingly caused real-life headaches for hedge funds like Melvin Capital.Johnny Louis/Getty Images
Melvin bailed on the bet on Tuesday afternoon, according to CNBC — a day after it got a $2.75 billion bailout investment from fellow hedge funds Citadel and Point72 Asset Management, run by Ken Griffin and Mets owner Steve Cohen, respectively.
But Melvin said it would not be filing for bankruptcy despite reported speculation about its demise online.
“The social media posts about Melvin Capital going bankrupt are categorically false,” the Melvin spokesperson said. “Melvin Capital is focused on generating high-quality, risk-adjusted returns for our investors, and we are appreciative of their support.”
GameStop’s Reddit fans have helped push its share price up more than 278 percent over the past week, with many of them buying volatile call options — financial contracts that only pay off if the stock price surges, according to reports.
That’s put pressure on short-sellers such as Citron Capital’s Andrew Left, who has called GameStop a “failing mall-based retailer.” He has said he was being threatened and harassed for betting against the stock.
The use of Reddit to pump up GameStop has reportedly drawn scrutiny from established investors as well as William Galvin, the top securities regulator in Massachusetts.
“I’m concerned, because it suggests that there is something systemically wrong with the options trading on this stock,” Galvin, the Bay State’s secretary of the commonwealth, told Barron’s on Tuesday.
“There should be legal and regulatory repercussions,” Michael Burry, the investor made famous by the book and film “The Big Short,” wrote in a since-deleted tweet. “This is unnatural, insane, and dangerous.”