GameStop Fever Goes Global: What You Need To Know

GameStop Fever Goes Global: What You Need To Know

Photo courtesy: Ardfern via Wikimedia

The GameStop Corporation (GME) short squeeze frenzy sweeping the United States markets has extended itself worldwide.

What Happened: Heavily shorted stocks in Europe surged on Wednesday with the likes of German pharmaceutical company Evotec SE (EVTCY) closing 9.6% higher in Frankfurt and publishing firm Pearson Plc (PSO) closing higher by 13.97% in London, reported Bloomberg.

Evotec and Pearson surged as much as 30% and 19% on Wednesday, while other heavily shorted stocks such as French property developer Unibail-Rodamco-Westfield SE (UNBLF) and real estate investment trust  Klepierre SA (KLPEF) rose 17% and 22%, respectively.

Nokia Oyj (NYSE: NOK), which soared 38.48% in New York, has gained 15% this week in Europe.

Why It Matters: The upward movement among short stocks in Europe is less extreme than in the U.S. where the Reddit forum r/WallStreetBets has led to a 685% increase in the stock of GameStop this year and an 804.54% spike in the shares of AMC Entertainment Holdings, Inc. (AMC).

Melvin Capital Management — the short seller who suffered a significant debacle over GameStop — has a 6.2% short on Evotec, Reuters reported.

Other Melvin shorts are said to include Polish video game company CD Projekt S.A. (OTGLY) and battery firm Varta AG (VARGF).

CD Projekt ended the trading day at 7.77% higher and Varta AG shares closed higher by 6.22% at press time in Frankfurt on Wednesday.

The rally in stocks in Europe may be an indication of institutional investors reversing their shorts, according to John Moore of Berkeley Capital Wealth Management, Bloomberg noted.

“I think partly it is to do with the Reddit story, but when we see moves like this in some of the bigger names, as in Pearson, that tends to be from an institutional level,” said Moore.

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