GameSpot avalanche continues

The dizzying rise of GameStop shares continued on Thursday as fresh investors continued to pile in and - possibly - as more hedge funds opted to 'throw in the tunnel'.

Gamestonk!! https://t.co/RZtkDzAewJ

— Elon Musk (@elonmusk) January 26, 2021

Year-to-date, the company's market value had risen by a factor of almost 19 to more than $24bn, after waves of retail investors began targeting some hedge funds' short positions in various listed outfits.

Caught unawares, several hedge funds had been left nursing heavy losses.

The stampede in and out of GameStop shares had also catapulted the firm into the second spo by market value on the Russell 2000 index.

As of 1254 GMT, stock in the video game retailer was ahead by 36.13% at $473.06, building on the previous session's nearly 135% surge.

Investors had reportedly been using the WallStreetBets online chat on social media Reddit to coordinate, going after the hedge funds' most aggressive short positions, with the so-called 'short interest' in the shares of some of the companies being sold most heavily by hedge funds sometimes greater than 100%.

That means that some companies' shares were being lent and sold twice by short-sellers.

On Wednesday night, GameSpot's shares were worth just over $24bn, having started the year off nearer to $1.3bn.

To take note of, some hedge funds that were forced to cover their speculative short positions in GameSpot at a loss may have been also been forced to close out long positions in other stocks or financial securities in order to generate the necessary cash.

Other stocks which had also seen a 'short squeeze' or benefitted from it included the likes of AMC Entertainment , Blackberry and Nokia.

Commenting on those events, Michael Hewson, chief market analyst at CMC Markets UK said: "While few people are shedding many tears about large scale hedge fund losses, after all if you play with fire, be prepared to get burned, the market turmoil is highlighting a number of areas within the market [...]

"It is already illegal for institutions to coordinate in the manner currently being seen in moving prices on these stocks, raising questions about the legality of what is currently taking place right now on these forums.

"Regulators have already said that they are monitoring what is going on, raising the possibility of further action if it causes further market instability."