TLDR
- Citron Research has abandoned its short position in GameStop (GME), citing the company’s $4 billion cash reserve and the market’s irrationality.
- GameStop has raised over $3 billion through two at-the-market offerings since May 17, boosting its cash balance to over $4 billion.
- The resurgence of stock influencer Roaring Kitty (Keith Gill) has sparked a renewed interest in GameStop, causing the stock price to surge.
- Despite closing its short position, Citron Research maintains a bearish view on GameStop’s fundamentals and believes the company’s turnaround is unlikely.
- GameStop’s stock has experienced significant volatility, rising by over 80% this year but declining 34% since Roaring Kitty’s livestream on Friday.
Citron Research, a prominent short seller, has once again closed its short position in GameStop (GME), the popular meme stock that has captured the attention of retail traders.
The decision comes amid the resurgence of stock influencer Roaring Kitty, also known as Keith Gill, who recently made a comeback after a three-year hiatus.
In a tweet on Wednesday morning, Citron Research made it clear that the closure of its short position was not due to a change in its bearish view of GameStop’s fundamentals.
Instead, the short seller cited the company’s $4 billion cash reserve as the primary reason for its decision, stating that GameStop now has “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
GameStop has been on a fundraising spree, capitalizing on the renewed interest in its stock. The company completed two at-the-market offerings since May 17, raising a total of $3.07 billion.
As a result, GameStop’s cash, cash equivalents, and marketable securities have swelled to over $4 billion, providing the company with significant financial flexibility.
The return of Roaring Kitty has played a crucial role in the recent surge of GameStop’s stock price. Shares of the game retailer spiked late last week, climbing to nearly $47 per share, as word spread about Gill’s first livestream in three years.
However, the stock has experienced volatility since then, plunging to below $25 before reversing course and climbing to $33.50 early Wednesday. As of this writing, the stock has dipped again to $28.69.
Citron Research’s founder, Andrew Left, had previously taken a short position in GameStop during the meme stock craze of 2021, when retail traders banded together to enact a short squeeze on institutional investors.
Left’s position resulted in a near-total loss, and he had recently re-entered the fray, telling Reuters last week that “it’s fun to go back into the fire.”
However, Citron’s latest short-lived bet against GameStop has once again been thwarted by the power of retail traders and the influence of Roaring Kitty. In its tweet, Citron Research took a jab at Gill’s recent livestream, calling it “an insult to the capital markets.”
Despite closing its short position, Citron Research maintains a bearish outlook on GameStop’s fundamentals.
The company believes that GameStop’s turnaround is unlikely and that the stock’s current valuation is driven by market irrationality. Citron Research pointed to the example of Dogecoin, a cryptocurrency with a $20 billion market capitalization despite its lack of fundamental value, to illustrate the current market sentiment.
