Shares of videogame retailer GameStop (GME) – Get Report skyrocketed Friday, after Andrew Left, managing partner of short seller Citron, said it’s abandoning the stock because of harassment from bulls.
GameStop shares galloped to a record and recently traded at $62.11, up 44%. They are trading at 15 times their level of six months ago. Investors have gone wild for certain stocks that benefited as consumers stayed home during the coronavirus pandemic.
As for Left, “What Citron has experienced in the past 48 hours is nothing short of shameful and a sad commentary on the state of the investment community,” he wrote in a letter on Citron’s Twitter page.
“We will no longer be commenting on GameStop, not because we don’t believe in our investment thesis, but rather the angry mob who owns this stock has spent the past 48 hours committing multiple crimes that I will be turning over to the FBI, SEC and other governmental agencies.”
Further, “This is not just name-calling and hacking but includes serious crimes such as harassment of minor children. We are investors who put safety and family first, and when we believe this has been compromised, it is our duty to walk away from a stock,” Left said.
“We hope that government enforcement will eliminate this problem for all future market commentators whose families get terrorized by people who naively think they are anonymous.”
TheStreet Founder Jim Cramer said the stock’s move Friday is a classic short squeeze. How does this work? Short sellers borrow shares and bet that a stock will decline. When the stock price instead rises, the short sellers must buy shares at the higher prices to return them to the lender. These purchases can drive the stock’s price yet higher, and this situation can then repeat itself.