GameStop shares soar more than 20%, on track for fifth day of gains

(Reuters) – Shares of GameStop jumped on Tuesday for the fifth straight day, as the meme stock rally that began earlier this year got more juice on news about the video game retailer’s e-commerce strategy and speculation that small investors will pour stimulus check funds into stock markets.

GameStop shares were up 23.5% to $239.80 in early trading, a day after the company entrusted leadership of its online sales efforts to board member and major shareholder Ryan Cohen, co-founder of online pet retailer Chewy Inc. 

The resurgent rally lifted other stocks favored by retail investors on forums such as Reddit’s WallStreetBets. Market watchers have cited the U.S. Senate’s passage of a $1.9 trillion stimulus bill including $1,400 direct payments to Americans as one catalyst.

Once the aid bill is finalized and signed into law, the U.S. government should be able to start delivering $1,400 checks quickly, tax experts said.

Since January, GameStop shares have had several wild swings, one of the hottest meme stocks followed on social media.

Shares of AMC Entertainment another popular bet among retail investors, were recently up around 5%, headphone maker Koss Corp climbed 1% and Blackberry Ltd rose by around 2%.

Cohen, a major shareholder who has pushed Gametop’s move away from its brick-and-mortar model, joined the board in January shortly before a social media frenzy drove a meteoric rise in which GameStop shares surged more than 1,600%.

The flurry of buying drove hedge funds that had bet against the stock to unwind their short positions, a situation known as a “short squeeze.” GameStop pared most of those gains the following month.

Some analysts believe another short squeeze may be adding to the recent gains. Short interest in GameStop was valued at $2.58 billion, or 24.3% of the stock’s float on Tuesday, compared to $1.80 billion, 32.6% in late February, according to data from financial analytics firm S3 Partners.

The number of shares sold short has dropped by about 25% since February 26 to 13.3 million shares, data from S3 Partners showed.

In Washington, the U.S. Senate Banking, Housing and Urban Affairs Committee planned a remote hearing titled “Who Wins on Wall Street? GameStop, Robinhood, and the State of Retail Investing.”