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Melvin Capital, Citron Throw In Towel And Cover GameStop Short

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Melvin Capital, Citron Throw In Towel And Cover GameStop Short

See also: How to Buy GME Stock

One of the biggest news stories of the last two weeks has been the battle between retail traders versus hedge funds that shorted GameStop Corp (NYSE: GME) stock.

Citron Research Covers Short: Citron Research’s Andrew Left was one of the most vocal opponents of GameStop, saying GameStop shares would fall below $20.

“People just want to buy the stock without even thinking about the business,” Left previously said. He called out the valuation noting GameStop traded at 42 times EBITDA, compared to 8 times EBITDA for Best Buy Co Inc (NYSE: BBY).

“There’s a high short interest for a reason because their business is pretty much in terminal decline.”

On Tuesday, Left took to YouTube to provide an update on the short position and what he sees happening to GameStop in the future. Citron Research covered its short with GameStop in the $90 range taking a 100% loss.

“I’m just fine, Citron Capital is just fine," he said.

Related Link: GameStop Investor Michael Burry Of The Big Short Fame Dubs Rally Unnatural, Insane And Dangerous

Despite covering the short, Left still believes GameStop shares will decline in the future. He compares the move to one seen in Tilray (NASDAQ: TLRY) that took shares over $200 before crashing back down to $6 and now trading around $17. Left notes that nothing has changed about GameStop except the share price.

Left called out those making threats against his company and family, saying that when he took on large companies he never got personal. He also cautions traders who made profits on GameStop to set some money aside to pay taxes on the gains and have “cautious investing.”

“I also have respect for the people on the WallStreetBets and on the Reddit message boards," he said.

Melvin Capital Covers Short: Another hedge fund that suffered large losses from going short was Melvin Capital.

Melvin Capital told CNBC that its short position has been covered. The company later confirmed it took a huge loss on the position, but would not reveal the amount of the loss and said speculation about Melvin Capital going bankrupt are "categorically false."

Citadel and Point72 infused nearly $3 billion into Melvin Capital to help the company financially.

GME Price Action: Shares of GameStop are up 60% to $236.33 in pre-market trading Wednesday.

 

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