'Gamestonk!!' - Musk joins the retail bros' battle against Citron
Jan. 27, 2021 3:59 AM ET GameStop Corp. (GME) By: Yoel Minkoff, SA News Editor 134 Comments
After surging over 90% yesterday back to the $150 level, GameStop (NYSE: GME) got another boost from a well-known short-seller battler - Elon Musk. It only took a one-word tweet from the master troller, "Gamestonk," to propel GME shares another 46% to $217 in after-hours trading (the stock is up 1000% since Jan. 12) The Tesla (NASDAQ: TSLA) CEO has fought with the shorts for years over the future of the EV maker, but many were forced to admit defeat last year.
Backdrop: Citron Research's Andrew Left, the famed short-seller (or infamous according to the retail bros), has a long history of opining on Tesla, shorting shares at least as early as in 2013. Left had a big turn of heart in October 2018, when he took a long position and said "the story has become too compelling to ignore," but just before the big run-up in 2020, he announced that Musk would even short the electric car maker at this level. "This is no longer about the technology, it has become the new Wall St casino," Left declared, though TSLA surged another 400% since then.
Statistics: Tesla had long been a favorite play for shorts, which controlled about 19% of shares at the start of 2020. About two-thirds of the positions were unwound over the course of the year after recording $40.1B in losses. In fact, the losses endured by Tesla shorts were more than the short losses for the next nine companies - combined. Meanwhile short interest of GameStop has held steady at a massive 140% of the float, leading to trouble for some hedge funds. Melvin Capital has required a $2.75B cash infusion from Citadel and Point72 to help it weather the losses from its GME short position (it also held put options on Tesla for years).
After promising not to comment on GameStop after attacks from the "angry mob" (a.k.a. the "Wall Street Bets" Reddit forum), Citron's Andrew Left doubled down on his position. "If I had never been involved in GameStop and came to this right now, would I still be short this stock? 100 percent," Left told Reuters, adding that he "created this game, based on uncovering the truths, so I can't get mad at people for taking the other side." But as the retail bro army rallies the troops, he may be left holding the short short end of the stick and nursing millions in losses. Will Musk and the r/wallstreetbets subreddit have the last laugh? |
