what happened

Yesterday was supposed to be a bad day for the video game retailer malls GameStop (New York Stock Exchange: GME). In a Twitter post, short-selling company Citron Research threatened to post a live video featuring „GameStop’s Five Reasons“ [buyers] They are the dupes at this poker game and „Why Are GameStop Stocks“ Returning To $ 20 Fast. “

The video didn’t arrive as promised, however, GameStop didn’t return at all. Instead, it’s up 10%, and it’s up another 21% today as of noon EST.

So what

Why does this happen? Some believe GameStop Short sellers Suffer from deficiencies Squeezes – And maybe that’s true. It’s also true, however, that Citron failed to post live broadcasts when it promised, blaming „people who hack Citron twitter“ for the delay yesterday.

Too many people who hack Citron twitter account, will register and post later today. GME $ Going to $ 20 to buy at your own risk

Citron Research (CitronResearch) January 21, 2021

The video eventually came out, but it wasn’t live. In it, Citron President Andrew Left outlines his five reasons for selling GameStop, which basically work as follows:

1. Despite the short term interest in GameStop stocks, “no short squeeze is happening” because there are still plenty of GameStop stocks available to borrow and sell.
2. Hardware sales grew 23% year over year in December, but GameStop sales were down 9%, so it lost market share in favor of Best buyAnd the WalmartAnd and Amazon.
3. GameStop sells 40 times EBITDA in the next year, which is really expensive.
4. The Twitter mob is pushing the share price up, which leads to that high valuation.
5. GameStop has over $ 1 billion in debt and will likely sell shares to reduce its debt. Dilute anyone Who bought at GameStop.

What now

I agree with most of those arguments – aside from those of no short squeeze. Anyone who shorted this stock, and is betting that it will go down, is probably at least a little nervous as he sees it getting more expensive.

A reminder: When you sell a short stock, and it hits $ 0, you are making 100% profit. When you sell a stock that is short but rising, your losses are likely unlimited. In the end, Citron thinks GameStop is a „failed shopping center retailer“ – but is a GameStop short seller Who fail today.