Missed GameStop (GME)? These 2 Stocks May Be Next

At the market open on January 4, GameStop’s (GME) shares were at $19. Near the opening of trading on January 25, GME had shot up to an unbelievable price nearly $160!

By Jan 28 it was up to $480 and then closed down to $200.

Realistically, this isn’t a common occurrence, but what is more astounding is the reaction from the media.

A Reddit subgroup called WallStreetBets is attributed to the massive price increase. The followers of the site noticed the short interest for the company was over 100% and it was a stock that they liked.

Then, Andrew Left of Citron Research posted a video stating the reasons why the stock should be shorted. Because GameStop as a company is loved by many of the WallStreetBets crowd, they decided to do something about it.

They started buying.

GME had multiple hedge funds shorting the stock. Because of this, the online group collectively put on a “short squeeze” — forcing the short positions to buy the stock or close out.

As of this writing, there is an estimated $70 billion — that’s billion with a B — lost on the shorts! Citron is reportedly out of all their short positions, but there are others holding out.

Just like any transaction in a free marketplace, there are buyers and sellers. In this case, the sellers were left holding the bag because they got greedy.

The buyers ran up the price, making it impossible for the shorts to profit.

Because of all the activity, many major clearing houses, including E-Trade, Ameritrade and Schwab, halted new positions in GME. Traders could only sell the stock.

There is some precedent for this, but it usually is when the stock is dramatically falling, not increasing!

Brokerages putting the brakes on GME included the Robinhood platform, whose users were credited for the unprecedented rise of Tesla and many of whom also frequent the WallStreetBets group.

Tesla essentially had a similar short squeeze last year that caused a meteoric rise in the share price and gave the company a higher market cap than Toyota.

That wasn’t as concerted an effort by a particular group but may have given the Reddit crowd the idea to save GME.

What’s next?

While it’s impossible to predict the next move of any online collective, there are some clear targets for the GameStop group, if they decide to continue their short squeeze campaign.

For starters, Virgin Galactic Holdings (SPCE) has an 81% short interest.

This could be a viable candidate for a squeeze, much like Tesla. It too has a cult-like following that would not only like to see it do well but will do what they can to make it happen.

From late December 2020 to January 2021, it has gone from $24 to a high of $56.

Another stock that is on the radar of the WSB gang is AMC Entertainment Holdings Inc (AMC).

AMC has been hit hard, much like GME, from the COVID shutdowns. There are a lot of posts that mention AMC, but it hasn’t yet shot up, even though it is already considered overvalued.

Currently, the stock is $8 with a high of $18 and a price that started the year at $2.

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