The rally in GameStop Corp. shares showed further signs of losing momentum on Wednesday as the stock halved earlier gains after news of a trio of executive hires, including the appointment of a chief technology officer.
The stock climbed 13% to $102 at 1:25 p.m. in New York, erasing much of its earlier 26% gain. Wednesday’s swing in prices follows a 72% selloff over the first two days of the week, which has now has erased $15.5 billion in value from the company this week.
The stock has been the poster child for retail investors looking to squeeze short sellers. It remains up more than 400% this year after the community of day traders collaborated on Reddit’s WallStreetBets forum to take on the Wall Street establishment.
The Grapevine, Texas-based retailer announced the appointment of Matt Francis, an Amazon Web Services alum, to its newly created role of chief technology officer, it said in a statement. It also hired Kelli Durkin as senior vice president of customer care and Josh Krueger to be vice president of fulfillment.
The additions are the first moves since Chewy Inc. co-founder Ryan Cohen joined the board in January after disclosing a 5.8 million-share stake through his RC Ventures. Durkin has previously worked at Chewy and Krueger has held senior roles at Walmart Inc., Amazon.com Inc. and QVC Inc.
“The new leadership positions seem aligned with the shift to digital that RC Ventures is pushing,” said Joseph Feldman, analyst at Telsey Advisory Group. “The reality is that business will look better this year regardless of any strategic changes because of the new video game console cycle,” including Sony’s PlayStation 5 and Microsoft’s Xbox Series X.
Trading has been volatile over recent weeks for the video-game retailer, which has added about $5.9 billion in value this year despite the recent losing streak. With 30 million shares having changed hands Wednesday, volumes were one-third of what’s been typical over the past two weeks.
The initial pop for GameStop and Reddit-fueled retail favorites Wednesday morning “looks more like a dead-cat bounce,” according to Edward Moya, senior market analyst at Oanda.
Other Reddit favorites rebounded Wednesday as the platform’s users encouraged each other to continue fighting back against Wall Street. Headphone maker Koss Corp. rose 37%, theater operator AMC Entertainment Holdings Inc. gained 19% and pot company Sundial Growers Inc. rallied 21%.
“The spotlight on r/wallstreetbets has increased exponentially even though the short squeeze has reversed,” Barclays Plc strategists led by Maneesh Deshpande wrote in a Wednesday note. “Even if the current short squeeze is not likely to result in the win retail investors had positioned for, institutional investors are now more likely to incorporate the impact of retail sentiment and positioning in their portfolios going forward.”
With short sellers pulling bets off the table, the percentage of GameStop shares available that are currently sold short tumbled to 52% from a high of 140%, S3 Partners data show.
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