The GameStop Saga

At Bloomberg, Brandon Kochkodin explains how GameStop become the hottest stock on Wall Street. Here’s a sample:

Before this year, GameStop was a cash register for bearish traders, who borrowed and sold more shares than the company issued. Hedge funds had been winning so long that they overlooked the tinderbox they were creating should sentiment turn.

Now it has, violently. GameStop, which isn’t expected to turn a profit before 2023, has seen its market value triple to $4.5 billion in three weeks, burning the skeptics whose any attempt to cover is likely to further propel its ascent.

A notable victim of the shift has been Citron Research’s Andrew Left, once Wall Street’s most celebrated iconoclast for his role hounding Bill Ackman out of another battleground stock, Valeant Pharmaceuticals, five years ago. Today, Left finds himself first among the hunted, his decision to stop publicly bashing GameStop helping drive it up as much as 78% on Friday.

“Price movement aside, I am most astounded by the thought process that goes in to making these decisions,” Left said in an email to Bloomberg News on Monday. “Any rational person knows this type of trading behavior is short lived.”

Posted by on January 25th, 2021 at 3:48 pm


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