WBD - GameStop's Short Squeeze Anniversary: A Look Back At David Vs. Goliath Battle And What's Next (CORRECTED) | Benzinga
Editor’s Note: This article was originally published on January 13, 2023, and has been updated to remove a reference to Citadel Securities.
An epic battle that saw retail traders take on hedge funds played out in early 2021 and centered around video game retailer GameStop Corp. (NYSE: GME).
Here’s a look back at what happened, what’s happened since and what could be next.
What Happened: Struggling video game retailer GameStop became the target of short sellers betting on a further decline or bankruptcy. Community support on the r/Wallstreetbets subreddit and other social media outlets led to an epic short squeeze story that dominated the headlines in early 2021 and throughout the year.
One of the places where the short squeeze story gained steam was on Benzinga’s "Power Hour” show, where Citron Research’s Andrew Left joined to share his thesis on why he was betting against GameStop.
On Jan. 21, Left was interviewed live and the video had thousands of messages in the chat defending GameStop’s future growth and why Left was wrong.
The stock rose on the day and over the next several days, leading the Benzinga interview to be one of the places considered as the "room where it happened.”
Two other central figures in the GameStop storyline were Ryan Cohen and Keith Patrick Gill.
Cohen is the founder of Chewy Inc (NYSE: CHWY) and is now the chairman of the video game retailer. Cohen took a 9% stake in GameStop which was announced in August 2020 and increased his stake to 13% in 2021, becoming a hero figure for those rallying around GameStop.
Keith Patrick Gill, who went by the handle Roaring Kitty on YouTube and DeepF***ingValue on Reddit, placed a $56,000 bet on GameStop through call options and posted his research to YouTube and Reddit. Gill’s investment was worth tens of millions of dollars in January 2021.
Retail traders were drawn to GameStop thanks to research online and also as a way to take on hedge funds ...