GameStop shares more than double as angry mob targets short sellers,

An online trading forum waging war on short sellers has pushed GameStop shares to stratospheric heights.

GameStop is pivoting away from bricks and mortar as its shares take flight.

If you thought the valuation of Bitcoin and Tesla stock was crazy, as they say on the internet, “Hold my beer’’.

Driven by a “hive mind” of now more than four million angry “Redditors”, a new generation of investors motivated as much by memes, Elon Musk tweets and a deep antipathy for Wall Street hedge funds, have piled into shares in moribund US company GameStop, sending its valuation way beyond what any sensible financial metric would dictate.

The stock piled on 134.8 per cent in US trade, closing at $US347.51 early on Thursday, up nearly $US200.

The shares were changing hands for $US4.21 a year ago. And the madness appears to be far from over.

A vast community of traders, brought together by the wallstreetbets community on Reddit, is firing each other up with talk of an “infinity squeeze” kicking off on Friday morning US-time, as those holding short positions madly try to bail out of the stock.

Echoing the HODL (hold on for dear life) mantra of Bitcoin’s true believers, they are encouraging each other to buy and hold - except for that one guy who sold some stock to pay for surgery for his sick dog (not a joke).

And adding weight to the theory that a fool and his money are soon parted, volume in Perth-based nickel hopeful GME Resources - which shares the same trade ticker as GameStop, albeit on the local bourse - saw a 130-fold jump in trade volumes on Thursday, with the stock trading as much as 50 per cent higher before settling to close at 8.5c.

Managing director Jamie Sullivan said with a chuckle that indeed, the ASX had been in contact about the company’s sudden surge in volume, but had been understanding about the situation.

“It’s fortuitous, perhaps a few more people will know a bit more about GME Resources now,’’ he said.

“Publicity like this is hard to buy as a junior. We’ll take what we can get.’’

For the record, GME is developing a nickel cobalt laterite deposit with an 81 million tonne resource grading more than 1 per cent nickel, in good proximity to a refinery, Mr Sullivan said.

For the GameStop traders, making money is definitely a motivation, but anger at the perceived corruption and illegitimacy of Wall Street traders is arguably a close second.

“I am a little late to the game but what do I need to do to join in pissing off the 1 per cent?’’ Atkena2578 asks on Reddit.

“Buy GME and hold that f**ker no matter what happens with the price,’’ HeLLRaYz0R replies.

And the motivation?

“Screw short sellers and the people who used retirees (sic) pensions as free gambling money,’’ ToyTrouper says.

One Reddit user, who goes by the handle DeepF**kingValue, has been posting his positions in the stock since September 2019.

If they are to be believed, that trader has turned $US50,000 into $US22 million.

And what of the company itself? Its results are lacklustre.

GameStop, which is in the process of pivoting away from bricks and mortar video game sales into online delivery, produced a $US18.8 million loss for the 13 weeks to the end of October 31. Revenue fell more than $US400 million compared with the previous corresponding period to just more than $US1 billion.

It had closed 462 stores over the preceding 12 months and is pursuing a “de-densification’’ strategy. And yet the stock rises.

The attack on short positions is spilling over into other stocks, with AMC Entertainment Holdings up 301 per cent overnight (up from $US2.39 to $US19.90 in a month) and BlackBerry shares up 32.6 per cent, up from $US6.88 in late December to $US25.10.

Australian shares which have captured the interest of short sellers, such as the locally listed scrip of Unibail-Rodamco-Westfield and InvoCare bounced as the rest of the market floundered in Thursday’s trade.

Where to from here for GameStop shares is anyone’s guess.

At a valuation of $US23 billion Gamestop, Bloomberg reports, is arguably about US20 billion overvalued.

It’s value is currently on a par with Delta Airlines and is worth more than Kellogg Co.

For Wall Street’s investment community it’s uncharted territory and the correct strategy is not clear. But for wallstreetbets it’s pretty simple: “Hold GME and let’s ride this rocket to the moon.’’