GameStop’s latest rally has pushed shares up roughly 50% in the past month amid a new meme-stock boom

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  • Meme stocks are experiencing a resurgence, with shares of GameStop rising roughly 50% in the past month.
  • The rise can be partially attributed to a short-squeeze as the company’s short interest remains elevated at 20%.
  • Shares of Gamestop have risen more than 1,200% since December 31, 2020.
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GameStop stock continued its rally on Friday amid a meme-stock resurgence with shares rising as much as 5.39%.

In the past month alone, shares of GameStop are up nearly 50%, while fellow Reddit darling AMC has seen an incredible rise of nearly 200% over the same period.

The jump in share price can be at least partially attributed to a short-squeeze as 20.27% of outstanding shares are currently sold short, according to data from S3 Partners managing director of predictive analytics, Ihor Dusaniwsky.

GameStop shares were also buoyed by the company’s recent announcement that it is building a non-fungible token (NFT) platform based on the ethereum blockchain.

The meme-stock resurgence has put short sellers in some serious trouble. On Tuesday alone, short sellers in AMC and GameStop lost $618 million, according to data from ORTEX.

GameStop stock is up more than 1200% since December 31, 2020, and the company has capitalized on the move.

The video game retailer raised more than $550 million via an at-the-market share offering, paid down debts, and implemented a turnaround strategy led by Chewy.com co-founder Ryan Cohen.

However, GameStop’s resurgence comes in spite of recently released data that shows videogame sales declined on a year-over-year basis for the first time in 14 months in April, according to NPD Group.

Game Stop also let its former CEO, George Sherman, walk away last month with a $170 million pay-out.

Shares of Gamestop still trade around 45% off of the company’s record-high of $483 per share, reached during the wild late-January short-squeeze.

GME chart 4
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David Einhorn says Chamath Palihapitiya and Elon Musk were the ‘real jet fuel’ for the GameStop short squeeze – and that regulators have been defanged when it comes to policing markets

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  • Greenlight Capital’s founder David Einhorn took shots at Elon Musk and Chamath Palihapitiya in his quarterly investor letter published Thursday.
  • Einhorn said securities laws surrounding stock manipulation “don’t apply” to Musk.
  • The hedge fund manager also said Palihapitiya’s GameStop tweets and options trades may have helped him “harm a competitor” in Robinhood.
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GreenLight Capital’s David Einhorn believes billionaires Chamath Palihapitiya and Elon Musk were “the real jet fuel” for the GameStop short squeeze and that regulators have been defanged when it comes to policing markets.

In a letter to investors released on Thursday that discusses his firm’s first-quarter results, Einhorn ripped into Chamath Palihapitiya, Elon Musk, and US securities regulators.

Einhorn said there’s “no cop on the beat” to regulate equities these days and argued “quasi-anarchy appears to rule” the markets.

“Many who would never support defunding the police have supported – and for all intents and purposes have succeeded – in almost completely defanging, if not defunding, the regulators,” Einhorn wrote.

Einhorn added that he believes the GameStop short squeeze that occurred at the start of 2021 was fueled in large part by billionaires Chamath Palihapitiya and Elon Musk.

“We note that the real jet fuel on the GME squeeze came from Chamath Palihapitiya and Elon Musk, whose appearances on TV and Twitter, respectively, at a critical moment further destabilized the situation,” Einhorn wrote.

The GreenLight Capital founder said Palihapitiya may have had an incentive to harm his competitor Robinhood when he tweeted out “let’s goooooo!!!!” after buying February $115 calls on shares of GameStop back on January 26.

“Mr. Palihapitiya controls SoFi, which competes with Robinhood, and left us with the impression that by destabilizing GME he could harm a competitor,” Einhorn wrote.

Read more: BTIG identifies 14 beaten-down stocks poised to dominate the market this earnings season and extend their track record of crushing expectations

Palihapitiya did donate all of his gains in GameStop and the initial capital for the investment to Barstool founder Dave Portnoy’s charity, but the billionaire was active in defending the Reddit trader movement that pushed GameStop shares higher.

Palihapitiya appeared on CNBC on January 27 and said the GameStop phenomenon was an example of individual investors pushing back against the Wall Street establishment.

Einhorn went even further with his critiques of Elon Musk in his letter to investors.

The GreenLight Capital founder said that if regulators wanted Elon Musk to stop manipulating stocks, they should have hit him with more than a “light slap on the wrist when they accused him of manipulating Tesla’s shares in 2018.”

“The laws don’t apply to him and he can do whatever he wants,” Einhorn added.

Einhorn also said Michael Burry’s exit from Twitter after the SEC visited him at his home was an example of his decision to “stop publicly speaking truth to power.”

The fund manager’s quotes about GameStop certainly stick out, though the fund’s performance is also noteworthy for its loss in the quarter. Einhorn’s funds returned -0.1% in the first three months of 2021, compared to a 6.2% return for the S&P 500 index.

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