GameStop shares sink further, taking two-day loss to 65pc

Shares in GameStop sank further on Tuesday, sliding by 50 percent to about US$111 per share, CNBC reports.

The tumble follows a more than 30 percent drop during the regular market session Monday. When trading was halted shortly after the opening bell, the stock was down roughly 65 percent since Friday’s close.

GameStop’s shares have traded wildly in recent weeks after retail traders on a Reddit forum sparked a short squeeze in the stock, a phenomenon where traders who had bet against the stock are forced to buy it to limit their losses, pushing the price even higher.

Short interest in GameStop as a percentage of shares available for trading dropped to about 53 percent from over 110 percent a week ago, according to data from S3 Partners.

“Both fundamental and momentum short sellers have found opportunities and price exit points to trim their positions in the face of these losses as the GME short squeeze is in full force,” said Ihor Dusaniwsky, S3 managing director of predictive analytics.

The recent covering pared short sellers’ losses in the stock to about US$13.4 billion year to date, from nearly US$20 billion just last week amid the stock’s remarkable pop, S3 data showed.

The retail activity has helped fuel extreme volatility and high trading volume in GameStop and other stocks. However, Monday’s trading volume was the lowest in the brick-and-mortar video game retailer’s stock since Jan. 20, according to FactSet.

However, one popular Reddit user, DeepF******Value, is apparently still holding onto his GameStop shares, incurring a loss of about US$5 million following Monday’s drop, according to a screenshot showing the user’s portfolio.

AMC Entertainment, another favorite of retail traders, was also falling before the bell. The movie theater stock dropped by more than 30 percent after squeaking out a gain of less than 1 percent during Monday market hours.

GameStop’s struggles came even as free trading brokerage Robinhood eased back on the restrictions it placed on highly volatile names. The brokerage allowed users to buy up to 20 shares of GameStop as of Monday afternoon, up from just one share at the beginning of the day and four shares around noon ET.

The volatile moves and brokerage restrictions have garnered attention from politicians and regulators in Washington. The chairwoman of the House Committee on Financial Services, Representative Maxine Waters, California, announced on Monday that there would be a hearing on February 18 about the recent trading in GameStop.