Shares of game retailer and Reddit favorite GameStop fell sharply in afternoon trading on Wednesday, capping off a tumultuous few days that saw the meme stock soar to nearly $47 per share last week before closing the trading day at $25.46.
The day's trading was particularly volatile, as GME rose to a high of $33.50 Wednesday morning before shedding more than 16% of its starting price by market close.
The plunge comes the same day renown short-seller Citron Research—which lost billions on its short position on GME during its headline-grabbing rally three years ago—announced that it was giving up, declaring, “We respect the market’s irrationality.”
Citron founder Andrew Left had only confirmed his firm's renewed short positions last week, telling Reuters that it was not as large as it was in 2021 but that “it's fun to go back into the fire.” Despite what he called GameStop's “deteriorating financials,” his firm tweeted its capitulation earlier today.
Today's stock price drop came despite an announcement from GameStop that it had grossed $2.1 billion in proceeds from its 75-million-share at-the-market equity offering.
“They have enough runway to appease their cult-like shareholders,” Citron observed.
Last month's return of famed meme stock advocate Roaring Kitty (a.k.a. Keith Gill) has sparked renewed interest in the company. Gill later revealed that he's taken a substantial position in $20 calls in GameStop, betting that its stock will be worth more than $20 on June 21.
Calls with the exact same expiration and strike price traded more than 93,000 times in the final hours of the day, according to CNBC, well over their 30-day average volume of about 10,000. The price of Roaring Kitty calls dropped more than 40% as the price of GME fell more than 16%.
GameStop shares were the target of a short squeeze effort enacted by retail investors in 2021, causing hedge funds and other institutional investors to lose billions in short positions. Roaring Kitty played a significant role in the stock market rollercoaster that culminated in investigations and congressional hearings in Washington, D.C.
Earlier this month, word spread that Roaring Kitty would return to the public eye after years out of the spotlight. This news sent GME shares skyrocketing, only to fall following the highly-anticipated livestream.
Edited by Ryan Ozawa.