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- Investor Chamath Palihapitiya told CNBC on Wednesday that the GameStop rally resembled Tesla’s rise.
- He said GameStop’s boom this week is another example of individual investors winning out over hedge funds.
- A collective effort by a Reddit community sent GameStop shares to the roof this week.
- Visit the Business Insider homepage for more stories.
GameStop’s unprecedented market surge, led by Reddit, has echoed Tesla’s rally for years, billionaire tech investor Chamath Palihapitiya told CNBC on Wednesday.
The CEO of Social Capital and former Facebook executive – who has made a name for himself in recent months speaking out against the greed of Wall Street – embarked on the GameStop trading frenzy on Tuesday, as Reddit users in the community of Wall Street Bets investors from the site have banded together to drive the retailer’s share price to new highs.
He closed his post on Wednesday, he told CNBC, and plans to donate the original $ 500,000 and any winnings to Barstool Sports’ Small Business Relief Fund.
GameStop’s rise to power looks like Tesla’s boom, Palihapitiya said, in the way individual investors won while skeptical institutions turned out to be wrong.
Tesla’s share price has exploded over 700% in the past year and over 13,000% since its IPO in 2010, far outperforming the market as a whole and consistently demolishing expectations of Wall Street. Along the way, many Wall Street analysts have scratched their heads. (Others threw in the towel and admitted they were wrong.)
“Let’s look at Tesla. Who was right about Tesla? I’ll tell you who was right: every retail investor. I was right. Elon Musk was right,” Palihapitiya said.
“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 make fundamentally useful things in the world, if they don’t fit the mold Wall Street wants, they’re trying to organize against it. “
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The surge in GameStop’s stock price – which hit an all-time high of $ 372.74 on Wednesday after gaining nearly 10,000% in just a few months – has prompted retail-strapped hedge funds to scramble.
Palihapitiya also rebuffed the idea that it was irresponsible for him and other day traders to inflate the shares of GameStop. Instead, Palihapitiya sees the frenzy as an act of defiance against the goliath institutional investors who typically held the reins of the stock market.
“The point is, just because you’re wrong doesn’t mean you have to change the rules,” Palihapitiya said. “Especially [since] when you were wrong you got bailed out last time. It is not fair.”
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