Trading frenzy in GameStop spreads to other meme stocks

NEW YORK • A flurry of buying that doubled GameStop shares on Wednesday afternoon spread to a dozen other meme stocks at the centre of last month's day trader-fuelled boom and bust.

GameStop jumped 104 per cent in its biggest advance since Jan 29, when Robinhood Markets restricted trading in it and 49 other stocks at the height of the frenzy.

An equally weighted Bloomberg basket of those stocks rose more than 5 per cent, the most since late last month. AMC Entertainment rallied 18 per cent to push a three-day climb towards 59 per cent. Express Inc surged 41 per cent, Naked Brand Group gained 31 per cent and Koss Corp jumped 55 per cent.

The flurry of activity inflated trading volumes in the meme stocks and caused an outage on Reddit's WallStreetBets forum, the hub of the January volatility.

"It seems like the Reddit crowd is still active and when you see a bit of news like that, they're pressing again," Gradient Investments portfolio manager Keith Gangl said in a phone interview. "Though I'm not sure how that'll last," he added.

The turbulence continued in late trading, where GameStop plunged as much as 12 per cent before rebounding to jump more than 85 per cent as at 4.45pm in New York. At US$155, the stock is up 244 per cent from its close on Tuesday.

The sudden revival in left-for-dead stocks recalled the frenzy last month that captured the attention of Wall Street, regulators and eventually Congress, as members of the forum egged on retail hordes in an attempt to take on professional short sellers.

Various explanations circulated as to what spurred the rallies.

The GameStop frenzy came after Bloomberg News reported late Tuesday that the firm's chief financial officer Jim Bell was pushed out in a disagreement over strategy to make way for an executive more in line with the vision of activist investor and board member Ryan Cohen, the co-founder of online pet-food retailer Chewy.com.

His addition to the board early last month underpinned the first flurry of moves in the stock after capturing the attention of WallStreetBets.

The clearing house, whose demands for increased margin collateral from Robinhood forced the brokerage to restrict trading last month, published a white paper on Wednesday that laid the grounds for speeding up the stock settlement process.

It proposed cutting settlement to one day from two, prompting some chest puffing among the retail crowd on Reddit.

The now infamous forum, which boasts 9.2 million members, saw so much demand that it would not load. When attempted, a page read "www.reddit.com is currently unable to handle this request" as at 4.43pm in New York on Wednesday.

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