Gamestop nyse Gme Stock Tumbles As Citron Research Exits Short Position

GameStop (NYSE: GME) Stock Tumbles as Citron Research Exits Short Position

GameStop (NYSE: GME) stock plummeted during intraday trading Wednesday after Citron Research announced it was abandoning its short position.

Citron Research announced on Wednesday that it has ceased shorting GameStop (GME) stock, pointing to the company’s substantial cash holdings following its latest equity offering.

In a social media post, Citron stated,

“Citron is no longer short GME. It’s not because we believe in a turnaround for the company fundamentals will ever happen, but with $5 billion in the bank, they have enough runway to appease their cult-like shareholders.”

GameStop announced late Tuesday that it generated $2.137 billion in proceeds from its latest equity offering, where it sold 75 million shares as part of an at-the-market offering.  This move has significantly bolstered its financial position, prompting Citron Research to reconsider its bearish stance on the stock.

“While the increased share count might temper the mob mentality, Citron will be watching from the sidelines for now,” Citron added. The firm also criticized a recent livestream by Keith Gill, aka Roaring Kitty, a prominent figure in the meme stock rally and an early catalyst of GME’s surge in 2020 and 2021. Citron described the livestream as “an insult to the capital markets.”

Wedbush Securities Cuts GME Stock PT

Simultaneously, Wedbush Securities lowered its price target on GameStop from $13.50 to $11, maintaining an underperform rating. This decision followed the completion of GameStop’s second equity offering in a month. The offering, completed on June 7, saw GameStop sell shares at $28 each, below Wedbush’s anticipated average price of $40/share.

Additionally, the company filed a shelf registration statement with the SEC in mid-May, allowing for future stock issuances of up to 1 billion shares of common stock and 5 million shares of preferred stock. As of May 4, GME had 306.187 million shares of common stock outstanding. GameStop plans to utilize the proceeds for general corporate purposes, including possible acquisitions and investments.

GameStop (NYSE: GME) Stock Movement

On Wednesday, GME stock plunged 16.50%, closing at $25.46, marking a 19.35% decrease for the week. The trading volume was 147,986,688 shares, significantly higher than the average daily volume of 41.94 million.