Yesterday should have been a bad day for mall-based video game retailers GameStop (NYSE: GME). In a Twitter post, retailer Citron Research threatened to post a live video outlining “The 5 Reasons GameStop [buyers] are the shoots in this poker game “and why GameStop stocks would return” to $ 20 fast. ”
However, the video did not arrive as promised, and GameStop did not return at all. Instead, it rose 10%, and today it rose another 21% from noon EST.
Why is this happening? Some believe that GameStop short sellers suffer for a short time – and that’s probably true. However, it is true that Citron failed to publish its live stream when it was promised, blaming “people hacking Citron twitter” for the delay yesterday.
Too many people are hacking Citron twitter, they will record and publish later today. $ GME will buy $ 20 at its own risk
– Citron Research (@CitronResearch) January 21, 2021
Eventually, the video came out, but it wasn’t live. In it, Citron CEO Andrew Left outlined his five reasons for selling GameStop, which basically go like this:
- Although there is a high short interest in GameStop stocks, “there is no short squeeze” because there are still many GameStop stocks that can be taken short.
- Hardware sales grew 23% year-on-year in December, but GameStop sales fell 9%, losing market share to Best buy,, Walmart, and Amazon.
- GameStop sells for 40 times EBITDA next year, which is really expensive.
- A crowd on Twitter raises the stock price, leading to this high rating.
- GameStop has over $ 1 billion in debt and is likely to sell shares to reduce its debt, diluting anyone who buys GameStop.
I agree with most of these arguments – except for the lack of a short press. Anyone who has sold this stock for a short time and bets that it will become cheaper is probably at least a little nervous to see that it is becoming more expensive.
As a reminder: When you sell a stock at a short level and it reaches $ 0, you get a profit of 100%. When you sell a stock short, but it rises, your losses are potentially endless. After all, Citron believes that GameStop is a “failing mall-based retailer” – but today, late GameStop vendors are failing.