© Reuters. FILE PHOTO: Traders work under signage for GameStop Corp. (NYSE: GME) on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 8, 2022. REUTERS/Andrew Kelly/File Photo
By Medha Singh
(Reuters) -GameStop shares looked set to extend their rally on Wednesday, after jumping 13% in premarket trading, suggesting a broader recovery in the market was spurring appetite for speculative bets among retail traders.
The videogame retailer’s shares were last trading at $15.30 and were among the most actively traded on the New York Stock Exchange at 8:54 a.m. ET.
Individual investors purchased $1.92 million worth of GameStop (NYSE:) shares on a net basis on Tuesday, their highest since Aug. 6, data from Vanda (NASDAQ:) Research showed.
The optimism in the market is attracting retail traders, indicating the market rally is overstretched, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
AMC Entertainment (NYSE:), another favorite among retail traders, rose nearly 3.6% to $6.94 on Wednesday.
The recovery in meme stocks comes as the closes in on its highest level for 2023 on hopes U.S. interest rates have peaked, breathing some life into speculative trading that has struggled this year.
Both, GameStop and AMC were among the most discussed by traders on social media site stocktiwts.com on Wednesday.
The sudden interest in GameStop comes ahead of its third-quarter results on Dec. 6. Analysts expect its net loss to narrow to $25.6 million from $93.4 million a year earlier.
“Some short sellers may be concerned both by this price move but also that GameStop will release better-than-expected earnings next week,” said Peter Hillerberg, co-founder of Ortex.
About 21.6% of GameStop’s publicly available shares are shorted, according to data and analytics firm Ortex.
Shares of GameStop are down 27% in 2023 up to Tuesday’s close, while those of AMC have shed 80% of their value.
