Photographer: Luke Sharrett / Bloomberg
Photographer: Luke Sharrett / Bloomberg
In the battle between short seller Citron Research and an army of day traders carried by Reddit, GameStop Corp’s seemingly endless rally. for a historical record it gave the bulls a victory, although not without controversy.
GameStop’s 105% gain through Friday comes after more than doubling the previous week and marks the most volatile 10-day period ever recorded, according to data compiled by Bloomberg. The stock was halted twice in New York, after jumping 70% to $ 73.09.
The parabolic rise of GameStop, which occurred amid high and constant short interest rates and increasing volume, showed the division between retail bulls and bears that bet on a quick return to reality.
A reaction against Citron by some Reddit users because of their views on GameStop peaked on Friday, when the short seller said he would stop commenting on the actions after the actions of “an angry crowd”.
“We are investors who put safety and family first, and when we believe that this has been compromised, it is our duty to abandon a lawsuit,” wrote Andrew Left, managing partner at Citron, in a letter on Friday.
The statement came a day after Left said in a YouTube video that he “had never seen an exchange of ideas from people so angry about someone joining the other side of a negotiation”, referring in part to Reddit users who have been particularly expressive on the social media site to promote their positive views on the video game retailer’s stock.
GameStop has risen 287% in January to date, with its 10-day average daily volatility peaking in the nearly two decades that the shares are being traded, data compiled by Bloomberg show. Friday’s impressive increase fueled its market value above $ 5 billion.
GameStop representatives did not immediately return an email asking for comment.
As the saga unfolded this week, GameStop fans clashed with Citron after the short seller criticized actions in a tweet on Tuesday and made plans for a Twitter Inc. with live broadcast the next day. The event was initially postponed to the inauguration of President Joe Biden and then again on Thursday due to attempts to hack the short-seller’s Twitter account.
On Thursday afternoon, Left posted a video on YouTube where he discussed the company, detailing five reasons why he thinks the shares of the company based in Grapevine, Texas, “will return to $ 20”. That is less than a third of the $ 72.82 that the shares traded at 12:43 pm on Friday, when the stocks detonated the volatility.
Wall Street analysts remained quiet amid the recent surge in stock volatility. CFRA Research analyst Camilla Yanushevsky reiterated her selling rating on January 15 and credited most of last week’s gains to a small squeeze after the activist investor and Chewy Inc. co-founder Ryan Cohen has been added to the GameStop board.
Bearish bets remained stable with 140% of GameStop’s available shares currently sold short, according to data compiled by S3 Partners. The bears had mark-to-market losses of more than $ 1.74 billion this year, according to the financial analysis firm.
“Although the older short positions are covering some of their positions due to the tightening of short selling based on profit and loss, there is a queue of new short sellers wanting to gain short exposure at GME after their recent run,” Ihor Dusaniwsky , manager of S3 director of predictive analytics, said by email.
– With the help of Luke McGrath
(Trading in addition shares was stopped twice after the shares in the second paragraph)