‘Gamestonk!!’: Shares of GameStop surge after hours following Elon Musk tweet

After floundering below $5 per share for almost all of 2020, shares of the video game retailer surged this year to close Tuesday at nearly $150. After-hour trading sent the stock price as high as $243 after Musk’s tweet before settling to $209.

But it’s not a sudden improvement in GameStop’s financials behind the rise — the company isn’t expected to turn an annual profit until at least 2023, and in November of last year, major stakeholder Ryan Cohen, a co-founder of online pet products seller Chewy, wrote a letter to GameStop’s board urging it to take dramatic steps to turn the company around.

Instead, day traders on r/WallStreetBets have turned the GameStop into a “meme stock,” driving up the value of GameStop’s shares and creating a massive short squeeze, in which investors are forced to buy stocks on something that they were betting against in an attempt to recoup losses — driving the price of the stock up even further.

“WSB Has Singlehandedly Restructured Risk Management Models,” one Reddit user posted.

Another user in the thread wrote: “Hedge fund managers live in the past, and continue to look down upon the retail investors. They truly believe that we, the average retail investors, don’t know anything about finances or the market (which may be true), and we’re just gambling our money away.”

This isn’t the first time a Musk tweet has influenced stock prices. Earlier Tuesday, Musk tweeted about a wool hat he bought for his dog on Etsy — after which Etsy’s stock bounced 8%, according to CNBC.

In 2018, Musk paid the Securities and Exchange Commission $20 million after he tweeted about potentially taking Tesla private after the stock price reaching $420 caused so much volatility in share price that trading the stock was halted for an hour.

Last year, Musk tweeted that Tesla’s stock price was “too high” — and shares slid more than 10% before rebounding through the week.