TLDR
- Short seller Citron Research has closed its short position in GameStop (GME) stock
- Citron cited GameStop’s $4-5 billion cash reserve as giving it “enough runway to appease their cult-like shareholders”
- Citron stated it respects the “market’s irrationality”, drawing parallels to Dogecoin’s $20 billion valuation
- GameStop recently raised $2.14 billion by selling 75 million shares during a price rally
- The rally was fueled by the return of Keith Gill (Roaring Kitty), who held $181 million in GME shares and options
In a surprising turn of events, prominent short seller Citron Research has backed out of its bet against GameStop (GME), closing its short position in the video game retailer.
This decision comes amidst a resurgence of interest in the meme stock, fueled by the return of Keith Gill, better known as Roaring Kitty, who played a pivotal role in last year’s GameStop trading frenzy.
Citron Research, known for its bold and often controversial short positions, had initially taken a new short position in GameStop shares just weeks ago. However, the firm’s founder, Andrew Left, announced on Wednesday that they are no longer shorting the stock.
In a post on the social media platform X (formerly Twitter), Left explained that their decision to close the short position was not based on a belief in GameStop’s fundamental turnaround prospects.
Instead, Citron cited GameStop’s substantial cash reserves, estimated to be around $4-5 billion, as the primary reason for their withdrawal. Left stated that this cash pile gives the company “enough runway to appease their cult-like shareholders.”
Citron is no longer short $GME. It's not because we believe in a turnaround for the company fundamentals will ever happen, but with $4 billion in the bank, they have enough runway to appease their cult like shareholders. Despite Wedbush setting an $11 target today, we respect the…
— Citron Research (@CitronResearch) June 12, 2024
This statement highlights the ongoing influence of the dedicated retail investor community that has rallied behind GameStop, often referred to as the “ape army.”
Notably, Citron also acknowledged the “market’s irrationality” as a factor in their decision. The firm drew a parallel to the cryptocurrency Dogecoin, which currently maintains a market capitalization of around $20 billion despite its meme-inspired origins and lack of real-world utility.
This comparison underscores the belief that market valuations can sometimes defy traditional fundamentals, driven by social media hype and speculative fervor.
The recent surge in GameStop’s stock price can be attributed, at least in part, to the highly anticipated return of Keith Gill, better known as Roaring Kitty.
Gill, a former financial educator and YouTuber, gained widespread attention during the initial GameStop short squeeze in 2021 for his early and vocal support of the stock. His recent livestream, the first in over three years, reignited interest in the meme stock among retail investors.
According to a Reddit post from June 2, Gill holds a substantial position in GameStop, with 5 million shares worth $115.7 million and $65.7 million invested in call options.
This substantial investment, combined with his influential online presence, has likely played a significant role in driving the recent price rally.
Adding fuel to the fire, GameStop itself capitalized on the heightened investor interest by completing an “at-the-market” equity offering, raising $2.14 billion through the sale of 75 million shares.
