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Melvin Capital, hedge fund targeting Reddit board, shuts out GameStop card position

Melvin Capital closed its short position in GameStop on Tuesday afternoon after taking a huge loss, hedge fund manager CNBC’s Andrew Ross Sorkin said.

GameStop, the hedge fund’s most hated stock, was targeted by an army of retail investors who plunged forces against short sellers in online chat rooms. In the Reddit forum “wallstreetbets” with more than 2 million subscribers, rookie investors encouraged each other to pile into GameStop’s equity and call options, creating massive short squeezes in the stock.

CNBC could not confirm the size of the loss, Melvin Capital took the short position. Citadel and Point72 have raised nearly $ 3 billion in Gabe Plotkin̵

7;s hedge fund to bolster its economy. Plotkin told Sorkin that speculation about bankruptcy is false.

GameStop shares have more than doubled this week alone to nearly $ 150 apiece, leading to January gains of 685%. The stock was only worth $ 6 four months ago.

Shares of the brick-and-mortar video game trader gained about 60% in pre-market trading on Wednesday after popping more than 100% earlier in the futures market.

Amid GameStop’s explosive rally, short sellers have accumulated losses of more than $ 5 billion years to date in the stock, including a loss of $ 917 million on Monday and $ 1.6 billion on Friday, according to data from S3 Partners.

Short seller Andrew Left of Citron Research said on Wednesday that he has covered most of his short position in GameStop with losses. He said earlier that GameStop will drop back to $ 20 per game. Stock “fast” and called attacks from the “angry mob” that owns the stock.

Investor Michael Burry said in a now-cleared Tuesday that GameStop trading is “unnatural, insane and dangerous,” and there should be “legal and regulatory implications.” Burry shot to fame by betting on the housing bubble and was featured in Michael Lewis’ book “The Big Short”.

The US Securities and Exchange Commission declined to comment.

Social Capital’s Chamath Palihapitiya jumped into the controversial name and said in a Tuesday tweet that he bought GameStop call options betting that the stock will go higher. His tweet seemed to intensify the rally in the previous session. The stock ended the day 92% higher at $ 147.98.

Elon Musk after the clock on Tuesday commented on the mania on Twitter and linked to “wallstreetbets” Reddit chat room. The Tesla director tweeted to his 42 million followers “Gamestonk !!” The comment seemed to help send GameStop shares soaring in expanded trading on Tuesday.

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