As an experienced financial analyst, I have seen my fair share of market anomalies and irrational behaviors. Citron Research’s decision to close their short position on GameStop (GME) is a testament to the growing disconnect between fundamental analysis and the forces driving this stock’s price.
As a researcher at Citron Research, I can share that we have decided to withdraw our short position on American video game retailer GameStop (GME) based on current market conditions and new information we have uncovered during our analysis.
Citron Research Closes GameStop (GME) Short Position
GameStop’s current market buzz caught the attention of Citron Research, but they expressed doubts about the company’s underlying financial health.
I no longer hold a short position on GameStop ($GME) from Citron’s perspective. This decision wasn’t driven by faith in the company’s potential turnaround or improvement of its fundamentals, but rather by our ample resources – $4 billion in cash on hand – to maintain the loyalty of our passionate shareholder base. Even with Wedbush establishing an ambitious $11 price target today, we recognize and respect…
— Citron Research (@CitronResearch) June 12, 2024
Despite Citron’s assertion that GameStop’s $4 billion savings will appease its loyal shareholders for a while, the firm also expresses concern over the market’s unusual behavior regarding the stock. Citron uses Dogecoin as an illustration of this irrationality, with a market capitalization of $20 billion for this crypto meme token.
Following a stretch of heightened instability for GameStop’s (GME) stock, the latest announcement emerges. Notably, analyst Michael Pachter of Wedbush Securities has given GME a below-par evaluation, setting a 12-month price forecast at $11. This figure represents a potential market correction of approximately 63% based on current prices. At this moment, the stock is quoted at $29.83 on Google Finance, representing a 2% decrease in pre-market trading.
As an analyst, I’d put it this way: In the recent statement, Citron acknowledged the possible impact of GameStop’s latest share issuance on dilution, while expressing my intent to abstain from engaging in the company’s stock at this time. The announcement ended with a remark targeting Roaring Kitty or Keith Gill, whose livestreams are believed to have ignited the 2021 GameStop rally.
Citron Research called the Kitty livestream an “insult” to the capital markets.
What’s Next for Citron and GME
Citron’s departure from GME stocks may not mark the end of market instability, but it underscores the widening gap between conventional stock analysis and the factors influencing the gameStop share price. Whether this move represents a tactical withdrawal or a full capitulation to the unconventional market dynamics remains uncertain.
As a crypto investor following the GameStop (GME) situation closely, I’ve noticed from past reports on Coingape that the price action might be nearing the conclusion of a triangle pattern. It’s essential to acknowledge that around half of these market structures could result in either an upward or downward breakout. However, various factors can influence which direction is more likely.
Notably, Vanguard CIO Gregory Davis once issued a warning regarding the volatility of GameStop.
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2024-06-12 18:30