GameStop surges more than 30% and is halted in odd trading; AMC shares also pop

A screen displays the logo and trading information for GameStop on the floor of the New York Stock Exchange (NYSE) March 29, 2022.

Brendan McDermid | Reuters

Shares of two meme stocks surged on Thursday, adding an unexpected wrinkle for a stock market that has been dropping in choppy trading for more than a month.

GameStop jumped more than 30% and was halted for volatility multiple times. The stock of theater chain AMC Entertainment popped more than 20%.

GameStop and AMC turned heads early last year when a band of retail investors coordinated trades on online chatrooms to create massive short squeezes in these stocks widely hated by hedge funds and other players. The meteoric rallies inflicted huge pains for many hedge funds and other short sellers involved in these speculative names.

Since then, the stocks have retreated from their peak prices, and short-sellers have started to build positions once again. According to FactSet, AMC has short interest of 19.5%, while GameStop sits at 21.4%.

Those large bets against the company can sometimes lead to dramatic one-day moves in a stock, as hedge funds move to close out their short positions when a stock rises, thus creating more buying pressure. This process is known as a short squeeze.

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