GameStock jumps more than 20% in single trading; AMC shares pop too

Shares of two Mimi shares rose Thursday, adding an unexpected ripple to a stock market that has been declining in choppy trading for more than a month.

GameStop jumped more than 20% and stopped due to volatility several times. Theatrical chain AMC Entertainment’s stock is up 18%.

GameStop and AMC turned heads early last year when a group of retail investors coordinated deals in online chat rooms to create massive short squeezes in these stocks widely hated by hedge funds and other players. The meteorite rallies caused great pain to many hedge funds and other short sellers involved in these speculative names.

Since then, stocks have retreated from their peak prices, and short sellers are starting to build their positions again. According to FactSet, AMC has a short interest of 19.5%, while GameStop has a short interest of 21.4%. Short interest is a measure of what portion of a company’s available equity, or float, is short sold.

These big bets against the company can sometimes lead to dramatic one-day moves in the stock, as hedge funds move to close their short positions when the stock goes up, creating more buying pressure. This process is known as short pressing.

Even with Thursday’s big moves, shares remained well below their highs from the first half of 2021. GameStop, which rose to $483 a share on a daily basis last January, was trading between $90 and $100 a share on Thursday.

AMC, which hit $72.62 on the day last June, was at about $12 a share on Thursday.

Since the market capitalization of companies has fallen so much, it is easy for a few commercial stores, or even one large fund, to impose new short squeeze.

In 2021, both AMC and GameStop took advantage of temporarily higher stock prices to sell additional shares and raise capital. Adam Aaron, CEO of AMC, went to great lengths to embrace the retail investors who participated in the rally, answering small traders questions about earnings calls and offering shareholder privileges in physical cinemas.

AMC partially used the money it raised to buy other theaters across the country. However, the company also bought a stake in a small gold mining company earlier this year that has a shaky financial history.

CNBC’s Yun Lee contributed to this report