In the battle between short seller Citron Research and an army of Reddit-laden day traders, GameStop Corp’s seemingly endless rally. at an all time high gave the title bulls a victory, but not without controversy.
GameStop’s 83% gain through Friday comes after more than doubling the week before and marks the most volatile 10-day period on record, according to data compiled by the Bloomberg Show. The action was halted at least four times in New York City, as it headed for a record-breaking close. The stock jumped 51% on Friday to $ 65.01.
At one point, the video game retailer was the most actively traded U.S. company with a market value of over $ 200 million, according to data compiled by Bloomberg, as millions of shares traded hands every few minutes. .
GameStop declined to comment.
Reddit users continued to increase their bets with one user saying they were counting on him to pay off their student loans.
GameStop’s parabolic rise, which occurred against a backdrop of constant and high short-term interest and increasing volume, highlighted the divide between retail bulls and bears betting on a rapid return to reality. More than 193 million shares were traded on Friday, marking the busiest day for the company since its IPO in 2002.
GameStop has become a cult action because of Ryan Cohen success with Chewy“and retail investors” appear confident that he can implement omnichannel initiatives that will significantly increase their revenues, “Wedbush analyst Michael Pachter said in an email.
For the company to be worth $ 50 a share, it would have to quickly double its growth, continued Pachter, who has a price target of $ 16, the second highest among analysts tracked by Bloomberg. In order to give GameStop the credit of higher profit power, Pachter, who rates the stock at neutral, wants to see Cohen’s strategy.
Reddit’s “angry mob”
A backlash against Citron by some Reddit voice users over his views on GameStop came to a head on Friday when the short seller said he would stop commenting on the action following the actions of an “angry mob” .
“We are investors who put safety and family first and when we believe that has been compromised, it is our duty to step away from a stock,” wrote Citron Managing Partner Andrew. Left, in a letter Friday.
The statement came a day after Left said in a YouTube video that he had “never seen such an exchange of ideas from people so angry with someone joining the other side of a business.” , referring in part to Reddit users who have been particularly outspoken. on the social media site seeking to promote their positive opinions on the video game retailer’s stock.
GameStop is up 245% in January so far, with its 10-day average daily volatility peaking at the highest level in nearly two decades of the stock’s trading, according to data compiled by Bloomberg. Friday’s meteoric surge fueled its market value above $ 4.5 billion at its peak.
As the saga unfolded this week, GameStop fans clashed with Citron after the shortseller criticized the shares in a tweet on Tuesday and made plans for a Twitter Inc. live the next day. The event was first postponed for the inauguration of President Joe Biden and then again on Thursday due to hacking attempts the short seller’s Twitter account.
On Thursday afternoon, Left posted a YouTube video in which he spoke about the company, detailing five reasons he believes shares in Grapevine, Texas, “will return to $ 20.” That’s less than a third of the $ 65.01 at which the stock closed Friday’s volatile session.
On the sidelines
Wall Street analysts have remained largely silent amid the stock’s recent wave of volatility. CFRA Research analyst Camilla Yanushevsky reiterated her sell rating on Jan.15 and attributed most of last week’s gains to a short squeeze after activist investor and Chewy Inc. co-founder Ryan Cohen has been added to GameStop’s board of directors.
Bearish bets remained stable with 140% of available GameStop stocks currently sold short, according to data compiled by S3 Partners. The bears have suffered more than $ 3.3 billion in mark-to-market losses this year, according to the financial analysis firm.
“While the older existing shorts have hedged some of their positions due to squeeze shorts based on lost profits, there is a queue of new short sellers who want to get short exposure to GME afterwards. its recent rise, “Ihor Dusaniwsky, director of S3 director of predictive analytics, said via email.
– With help from Luke McGrath, Kristine Owram and Olga Kharif
(Updates stock prices for market close throughout)