Retail traders reignite rally in GameStop shares

investing.com:

By Medha Singh and Saqib Iqbal Ahmed

(Reuters) -Retail traders powered a nearly 20% jump in GameStop (NYSE:GME) shares to a two-month high in regular trading on Wednesday, extending a rally ahead of the company's quarterly results next week and underscoring a return in appetite for risk.

The meme stock is up nearly 36% over the last two sessions at $15.31.

«Speculation is back… and GameStop is ground zero for speculation,» Steve Sosnick, chief strategist at Interactive Brokers (NASDAQ:IBKR), said.

AMC Entertainment (NYSE:AMC) and Cathie Wood's ARK Innovation ETF — other favorites among retail traders — were up nearly 3.5% and 0.5%, respectively.

The recovery in meme stocks comes as the S&P 500 closes in on its highest level for 2023 on hopes U.S. interest rates have peaked, breathing life into speculative trading that has struggled this year.

GameStop closed about 13% higher on Tuesday. Individual investors purchased $1.92 million worth of the company's shares on a net basis on Tuesday, their highest since Aug. 6, data from Vanda (NASDAQ:VNDA) Research showed.

Both stocks were among the most discussed by traders on social media site stocktiwts.com on Wednesday.

GameStop is set to post third-quarter results on Dec. 6, with analysts expecting its net loss to narrow to $25.6 million from $93.4 million a year earlier.

About 21.6% of GameStop's shares were sold short, according to data and analytics firm Ortex, and bearish investors stand to lose about $200 million on Tuesday and Wednesday combined.

«Some short sellers may be concerned both by this price move but also that GameStop will release better-than-expected earnings next week,» said Peter Hillerberg, co-founder of Ortex.

The surge in GameStop shares was backed by