Melvin Capital, hedge fund targeted by Reddit board, closes out of GameStop short position
PUBLISHED WED, JAN 27 20216:20 AM ESTUPDATED WED, JAN 27 20214:21 PM EST
GameStop was the single most traded name in the U.S. stock market on Tuesday, topping Tesla and Apple, even though they are 81 and 233 times larger in market cap terms, according to Deutsche Bank strategist Jim Reid.
Amid GameStop’s explosive rally, short sellers have accumulated losses of more than $5 billion year to date in the stock, including a loss of $917 million on Monday and $1.6 billion on Friday, according to data from S3 Partners.
Short seller Andrew Left of Citron Research said Wednesday he has covered the majority of his short position in GameStop at a loss. He previously said GameStop will fall back to $20 a share “fast” and called out attacks from the “angry mob” that owns the stock.
Investor Michael Burry said in a now-deleted tweet Tuesday that trading in GameStop is “unnatural, insane, and dangerous” and there should be “legal and regulatory repercussions.” Burry shot to fame by betting against the housing bubble and was featured in Michael Lewis’ book “The Big Short.”
The Securities and Exchange Commission declined to comment.
Social Capital’s Chamath Palihapitiya is among those who jumped into the stock, saying in a Tuesday tweet that he bought GameStop call options betting the stock will go higher. His tweet seemed to intensify the rally in the previous session. The stock ended the day 92% higher at $147.98.
After Tuesday’s closing bell, Elon Musk commented on the mania, linking it to the “wallstreetbets” Reddit chat room. The Tesla CEO tweeted to his 42 million followers “Gamestonk!!” The comment [URL='https://www.cnbc.com/2021/01/26/gamestop-jumps-as-elon-musk-tweets-out-reddit-board-thats-hyping-stock.html']appeared to help send GameStop shares soaring in extended trading Tuesday.[/URL]