GameStop Corp (NYSE: GME) is gaining at writing after short seller Citron Research said it has closed its entire position in the meme stock.
Why did Citron close its short position in GameStop stock?
Citron made the announcement this morning on X.com – confirming that the move has nothing to do with the video gaming merchandise retail’s fundamentals.
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.
Citron closed its short position in $GME at a profit, as per its founder Andrew Left. He did not, however, reveal the size of that profit on Wednesday.
GameStop stock is currently up more than 200% versus its year-to-date low in late April.
Citron Research is open to shorting $GME again
Citron Research revealed a short position in GameStop shares just last week.
The size of its bet against the retail company, however, was meaningfully smaller than 2021 when the investment firm was forced to close as retail investors went after the short sellers.
Watch here: https://www.youtube.com/embed/AvQ82M_vnlU?feature=oembed
Still, founder Andrew Left has plans of shorting $GME again if it surpasses $45 level in the coming days or weeks, as per his interview with Reuters on Wednesday.
Citron’s announcement comes only a day after the New York listed firm said it sold 75 million shares to raise another $2.14 billion on top of $933.4 million it did in May. GameStop stock is currently down about 35% versus its year-to-date high.
Wedbush sees a huge downside in GameStop shares
Also on Wednesday, analysts at Wedbush Securities lowered their price target on GameStop stock further to $11 only which translates to a more than 60% downside from here.
The video gaming merchandise retailer completed the aforementioned stock sale at an average price of $28.49 per share. The investment firm had expected $40 a share instead.
Our revised price target reflects roughly $9.50 per share of net cash, plus a going concern value of roughly $1.50 per share.
Note that $GME plans on using proceeds from the share sale for general corporate purposes that includes potential investments and acquisitions.
The bearish call on GameStop shares arrives only days after the Texas based company reported a 29% year-on-year decline in its first-quarter sales to $882 million versus analysts at over $900 million at least. $GME lost $32.3 million in Q1 (find out more).
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