- Investor Chamath Palihapitiya told CNBC on Wednesday that GameStop’s recovery resembles Tesla’s rise.
- He said GameStop’s surprising increase this week is another case of individual investors winning hedge funds.
- A collective effort by a Reddit community took GameStop’s shares to a height this week.
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The unprecedented increase in GameStop shares, driven by Reddit, echoes Tesla’s booming years, billionaire technology investor Chamath Palihapitiya told CNBC on Wednesday.
Social Capital’s CEO and former Facebook executive – who stood out in recent months for speaking out against Wall Street’s greed – went into the GameStop trading frenzy on Tuesday, when Reddit users in the investment community of website Wall Street Bets have come together to raise the retailer’s stock price to new heights.
He closed his post on Wednesday, he told CNBC, and plans to donate the original $ 500,000 and any earnings to the Barstool Sports small business aid fund.
GameStop’s rise resembles the Tesla boom, Palihapitiya said, in the way individual investors won, while skeptical institutions proved to be wrong.
Tesla’s stock price has exploded more than 700% in the last year and more than 13,000% since going public in 2010, far surpassing the market as a whole and consistently demolishing Wall Street expectations. Along the way, many Wall Street analysts scratched their heads. (Others threw in the towel and admitted they were wrong.)
“Let’s take a look at Tesla. Who was right at Tesla? I’ll tell you who was right: all retail investors. I was right. Elon Musk was right,” said Palihapitiya.
“Let me tell you who was wrong: every hedge fund. Name after name, when it comes to innovation, when it comes to growth, when it comes to people trying to do fundamentally useful things in the world, if they don’t fit the mold that Wall Street wants, they try to organize against it. “
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The surge in GameStop’s stock price – which hit a record high of $ 372.74 on Wednesday after gaining nearly 10,000% in a matter of months – caused hedge funds that were selling poorly at the retailer if they debated.
Palihapitiya also backed away from the idea that it was irresponsible for him and other brokers to inflate GameStop’s stock. Instead, Palihapitiya sees the frenzy as an act of defiance to the goliath institutional investors who normally controlled the reins of the stock market.
“The point is, just because you’re wrong, it doesn’t mean you can change the rules,” said Palihapitiya. “Especially [since] when you were wrong, you were released the last time. That’s not fair.”