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Short seller Citron Research has abandoned its short position in game retailer and meme stock GameStop as the company built up a $4 billion cash reserve amid the resurgence of stock influencer Roaring Kitty (a.k.a. Keith Gill), per an acerbic tweet Wednesday morning.
Citron made it clear it did not close the position because it now has a bullish view of the game company. Rather, the company said, “with $4 billion in the bank, [GameStop has] enough runway to appease their cult-like shareholders.”
Despite a lowered price target of $11 per share from investment firm Wedbush on Wednesday, Citron added that “we respect the market’s irrationality.”
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
The tweet ended with a jab at Roaring Kitty’s recent livestream, his first in three years, calling it “an insult to the capital markets.”
GME shares spiked late last week, climbing to nearly $47 per share, as word spread that Roaring Kitty had returned after several years out of the spotlight. Shares plunged early this week, falling to below $25 before reversing course and climbing to $33.50 early Wednesday. The stock has dipped again to $28.69 as of this writing.
The midweek spike may be attributable to GameStop’s announcement yesterday that it completed its at-the-market equity offering program, through which it sold 75 million shares for gross proceeds of $2.1 billion.
Citroen’s withdrawal comes less than two weeks after it had taken a new short position in the stock. Company founder Andrew Left told Reuters last week that “it’s fun to go back into the fire.”
“The first time, three-and-a-half-years ago, (GameStop) was a cultural phenomenon, and that’s played out by now,” Left told the news agency. “The company has deteriorating financials and is a good short.”
Citron had a short position in GME shares in 2021, when retail traders enacted a short squeeze to pressure institutional investors. The short seller was left taking a near-total loss.
With today’s news that Citron has bowed out of its latest bet against GameStop, it appears that Roaring Kitty has won a second round against the short seller.
Edited by Ryan Ozawa.
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Source: https://decrypt.co/235042/gamestop-short-seller-citroen-pulls-out-market-irrationality
