Dogecoin In Spotlight As Citron Closes Shorts in GameStop
Highlights
- Citron Research has backed out of the GameStop shorting business
- The short seller said $4 billion in savings might keep GameStop afloat for a while
- The firm took a jab at Roaring Kitty and Dogecoin in its retreat post
Citron Research, a popular short seller has announced the removal of the shares of American video game retailer GameStop (GME) as a potential short. “Citron is no longer short GME,” says Citron Research in a post on social media platform X.
Citron Research Closes GameStop (GME) Short Position
Citron Research delved into the current market enthusiasm surrounding GameStop and acknowledged its lack of faith in the company’s fundamentals.
Citron is no longer short $GME. It’s not because we believe in a turnaround for the company fundamentals will ever happen, but with $4 billion in the bank, they have enough runway to appease their cult like shareholders. Despite Wedbush setting an $11 target today, we respect the…
— Citron Research (@CitronResearch) June 12, 2024
Nonetheless, Citron claims GameStop’s $4 billion savings will keep its devoted shareholders happy for some time. The firm hints at a broader frustration with market behavior around the stock. Citron referenced the current valuation of Dogecoin (DOGE), a renowned crypto memecoin with a market capitalization of $20 billion, as another example of the market’s “irrationality.”
The announcement comes after a period of renewed volatility for GME stock. Meanwhile, Wedbush GameStop analyst Michael Pachter had set an underperforming rating on GME, with a 12-month price target of $11. This implies a market correction of over 60% according to today’s price. At press time, GME is trading at $29.83, down by 2% in pre-market trading, according to data from Google Finance.
In the announcement, Citron acknowledged the potential dilution caused by GameStop’s recent share issuance while making its intentions to stay on the sideline known. The post concluded with Citron throwing a jab at Roaring Kitty or Keith Gill, whose livestreams were credited with fueling the initial GameStop rally in 2021.
Citron Research called the Kitty livestream an “insult” to the capital markets.
What’s Next for Citron and GME
While Citron’s exit might not signal a definitive end to the volatility, it highlights the growing disconnect between traditional market analysis and the forces driving GME’s price. Only time will tell if this is a strategic retreat by Citron or a permanent surrender to the “irrationality” of the market.
According to previous report from Coingape, the GameStop price action is moving towards the end of a triangle. There is a 50% risk that these kinds of market patterns may break upward or downward. The odds, however, can be in favor of one side over the other when paired with other considerations. One of the key reason is that GME is still rising despite the recent severe crash.
Notably, Vanguard CIO Gregory Davis once issued a warning regarding the volatility of GameStop.
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