GameStop stock price surges 74%, short-selling hedge funds lose $838 million

Shares of U.S. game retailer GameStop surged 74% on Monday, causing heavy losses for short sellers who shorted the stock. Hedge funds that shorted GameStop lost $838 million on the day, measured at market value, according to data from analytics firm S3 Partners. Ihor Dusaniwsky, head of predictive analytics at S3 Partners, said that before the opening of trading on Monday, GameStop's "short squeeze" score had reached a full score of 100, and a large amount of short covering was expected. The sudden surge in GameStop's stock price seems to have been triggered by the internet celebrity Roaring Kitty, who made Wall Street history in 2021 by encouraging retail investors to buy GameStop in large quantities. Roaring Kitty posted a post on the X platform for the first time since 2021, posting a photo of a gamer focusing on the game, suggesting that the "game" has begun. In the "meme stock" craze in 2021, retail investors concentrated on stocks that were bearish by hedge funds, forcing short sellers to cover their positions and pushing up the stock prices of these companies. According to FactSet, more than 24% of GameStop's free float is currently shorted. According to S3 statistics, short sellers of GameStop have lost $1.24 billion since May alone. Dusaniwsky pointed out that short squeeze-related buying will push up GameStop's stock price, but new short sellers are expected to enter the short market at around $30. He warned that short sellers may experience a "bumpy and bloody" market in these stocks. In addition to GameStop, other meme stocks such as AMC and Reddit also surged on Monday, with AMC up 15% and Reddit up 9%. (CNBC)