GameStop Corporation GME short seller Melvin Capital Management LP said Monday it had received $2.75 billion in investment from hedge funds Citadel and Point72.
What Happened: While Citadel and its partners are investing $2 billion, Point72 is pumping in $750 million into Melvin Capital, the firm’s CEO Gabriel Plotkin said in a statement.
“The team at Melvin is eager to get to work and reward the confidence of these two great investment icons,” said Plotkin.
Point72 has already invested $1 billion invested in Melvin, as of 2019. The investments are in Melvin’s fund and in non-controlling revenue shares of the company, according to Wall Street Journal.
Why It Matters: Melvin has lost 30% through Friday, thanks to a series of short bets including against GameStop.
GameStop shares surged as high as $159.18 on Monday and closed nearly 18% high at almost $76.80. The shares rose another nearly 15.7% in the after-hours session to $88.87.
Benzinga PreMarket Prep co-host Dennis Dick dismissed the justification of a turnaround in the game retailer’s business.
“I’m trying to say this has absolutely nothing to do with company fundamentals in a move like GameStop,” said Dick.
The short squeeze in GameStop’s stock has been driven by online communities, which are in a spat with short seller Citron Research.
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