What happened

Shares of the video game retailer GameStop (GME -5.96%) had popped nearly 26% as of 1:37 p.m. ET today as excitement over a potential short squeeze rose on social media.

So what

GameStop is the pioneer of the meme-stock movement that took 2021 by storm, so the stock is heavily susceptible to big random moves up and down. 

Today, it looks like interest in the stock on social media is building, as short interest has risen to the highest it's been in more than a year, according to analytics company Ortex. The number of shares being shorted on GameStop is about 26.4% of the free float. The rising short interest has also significantly increased the cost to borrow shares, which is typically done in the practice of short-selling. Short interest can lead to a short squeeze, which has propelled several big GameStop moves in the past.

Lines pointing up and right in ascending order.

Image source: Getty Images.

GameStop earlier this week also announced the launch of its digital wallet for holding non-fungible tokens (NFTs) and cryptocurrency, as part of its plan to transform into a much more digitally driven company.

The stock hasn't moved higher this week until today, so perhaps the new wallet offering is catching investor interest, although it's likely more related to the buzz about short interest and the cost to borrow shares. The volume of shares being traded had risen to 5.26 million as of this writing, with recent volume averaging about 3.8 million shares.

Now what

GameStop is likely moving higher as meme-stock and retail investors look for a big squeeze in what has been a depressed market.

When things get like this, there can be intense volatility, so I would recommend watching the show from the sidelines. However, if you can't resist getting in on the action, only invest what you are willing to lose, because you could very well lose it all.