Not even the most cock-eyed optimist about brick-and-mortar video game purveyor GameStop—say, Chewy.com founder Ryan Cohen, who bought up 13% of the company last year specifically because it was a failing mall-based operator during a pandemic that wasn’t doing nearly enough to go digital, but which theoretically could and would therefore be worth more than the average $8.40 or so per share he paid for it—likely would have imagined that its shares would ever be worth $348, let alone that they would be worth that right now. Which they are, having jumped 135% today, after having added 93% on Tuesday, after having increased 18% on Monday, after having risen 51% on Friday. You get the idea.

Suffice it to say that a stock that was worth $18.84 on New Year’s Day is worth 1,744% more than that today. It seems equally sufficient to say that nothing about GameStop itself has changed sufficiently to warrant such a thing—it is still, after all, primarily a brick-and-mortar retailer, many of whose locations are in malls, during a time of plague that is not yet abating, and that any digital transformation, while promising, is still just that: promise—assuming anything fundamental could warrant such a thing, which seems doubtful.

Which means, as you certainly already know, it’s technical.

Fund managers covered their money-losing short sales while trimming bullish bets for a fourth straight session Tuesday. Over that stretch, their total outflows from the market reached the highest level since October 2014, data compiled by Goldman Sachs Group Inc.’s prime-brokerage unit show…. At Morgan Stanley, Monday and Tuesday ranked among the top five degrossing days for its hedge fund clients over the past decade, according to data from the firm’s prime brokerage unit.

Melvin Capital closed out its short position in GameStop on Tuesday afternoon after taking a huge loss, the hedge fund’s manager told CNBC’s Andrew Ross Sorkin…. Short seller Andrew Left of Citron Research said Wednesday he has covered the majority of his short position in GameStop at a loss.

Left had already decided to stop talking about GameStop last week, decrying the “angry mob” that he says is “bullying” his children, signing him up for Tinder and sending food deliveries to his house. But things have moved far beyond the r/WallStreetBets degenerates Left has sicced the cops, FBI and SEC on, and with them GME’s stock price.

Social Capital’s Chamath Palihapitiya is among those who jumped into the stock, saying in a Tuesday tweet that he bought GameStop call options betting the stock will go higher. His tweet seemed to intensify the rally in the previous session.

“Gamestonk!!” Musk wrote on Twitter shortly after Tuesday’s closing bell….

Awww, yea, the O.G. non-fundamental rally champion is weighing in! And since we’re talking about throwing money at things way beyond whatever intrinsic value they may have, Anthony Scaramucci’s got an idea.

“The activity in GameStop is more proof of concept that Bitcoin is going to work,” Scaramucci said in an interview. “How are you going to beat that decentralized crowd? That to me is more affirmation about decentralized finance….”

“It’s the age of the micro investor and you better take it seriously, otherwise you’ll get taken to the cleaners,” Scaramucci said.

Of course, there are ways to take it seriously, as noted GME paper hands Michael Burry might point out.

“If I put $GME on your radar, and you did well, I’m genuinely happy for you,” Burry, best known for his prescient bet against mortgage securities before the 2008 financial crisis, said in a tweet on Tuesday. “However, what is going on now – there should be legal and regulatory repercussions. This is unnatural, insane, and dangerous.”

Burry, whose investment firm reported owning a 2.4% stake in GameStop as of Sept. 30, said in an email interview on Tuesday that he’s now “neither long nor short.” He declined to comment on when he sold the stock.

GameStop jumps more than 130% even as hedge funds cover short bets, scrutiny of rally intensifies [CNBC]
Hedge Funds Slashing Equity Exposure at Fastest Pace Since 2014 [Bloomberg]
Melvin Capital, hedge fund targeted by Reddit board, closes out of GameStop short position [CNBC]
Elon Musk tweet adds fuel to massive GameStop stock rally [N.Y. Post]
Scaramucci Says the GameStop Saga Is Positive for Bitcoin [Bloomberg]
Michael Burry Calls GameStop Rally ‘Unnatural, Insane’ [Bloomberg]

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