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(Bloomberg) – In the battle between short seller Citron Research and an army of busy Reddit day traders, GameStop Corp.’s seemingly endless rally gave the stock bulls a victory, but not without controversy.
GameStop’s 45% 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 Bloomberg. The parabolic rise in the stock, which occurred against a backdrop of constant and high short-term interest and increasing volume, showed the divide between bulls and retail bears betting on a quick return to reality. .
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 Friday letter.
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 spoken particularly well. on the social media site seeking to promote their positive opinions on the video game retailer’s stock.
GameStop is up 174% in January to date, with its 10-day moving average daily volatility hitting its highest level in nearly two decades, according to data compiled by Bloomberg. Friday’s fluctuation between gains and losses kept its market value above $ 3 billion.
GameStop representatives did not immediately return an email requesting comment.
As the saga unfolded this week, GameStop fans clashed with Citron after the short seller criticized the shares in a tweet on Tuesday and scheduled a live broadcast from Twitter Inc. the next day. The event was initially postponed for 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 YouTube video in which he discussed the company, detailing five reasons he believes shares in the Grapevine, Texas-based company “will come back to $ 20.” That’s less than half of the $ 49.58 the stock was trading at on Friday morning at 11:38 a.m.
Wall Street analysts have remained largely silent amid the recent wave of stock volatility. CFRA Research analyst Camilla Yanushevsky reiterated her sell note on Jan.15 and attributed most of last week’s gains to short squeeze after the addition of activist investor and co-founder of Chewy Inc., Ryan Cohen, on the Board of Directors of GameStop.
Bearish bets have remained stable with 140% of available GameStop shares currently sold short, according to data compiled by S3 Partners. The bears have suffered mark-to-market losses of $ 1.74 billion this year, according to the financial analysis firm.
“While the existing old shorts covered some of their positions due to a squeeze shorts based on loss of profit, there is a queue of new short sellers looking to get short exposure in GME after its recent rise in power, ”Ihor Dusaniwsky, director of S3 director of predictive analytics, said via email.
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