Billionaire Investor Carl Icahn Betting Against GameStop Stock

(RTTNews) - According to reports, billionaire investor Carl Icahn has started shorting GameStop (GME) as individual investors piled into meme stocks and still has a significant position in the video-game retailer.

As per reports, Icahn started building his position in January 2021, when GameStop shares shot up from $61 to an all-time high of $483 in the span of just one week. The size of Icahn's position is not clear, cited a Bloomberg report.

GameStop stock has lost 79 percent of its value since the meme stock frenzy, once the four-for-one stock split the video-game retailer executed in July is accounted for. The shares closed at $25.37 on Monday.

Icahn appears to be betting that the stock will carry on falling, as its value is detached from its fundamentals.

Retail investors put money into GameStop and other meme stocks during the coronavirus pandemic, using forums like Reddit's WallStreetBets to support their efforts to hit institutions that had shorted the retailer.

This led to so-called "short squeezes" that badly damaged hedge funds including Melvin Capital, which shut down in May after losing billions by betting on the GameStop stock.

Investors who believe a stock's price will fall look for profit by selling the shares short. They borrow shares and sell them, with the plan of buying them back later at a lower price.

Recent data suggests that another short squeeze against GameStop could be building. Short interest in the stock is at 21.05% of float, or around 53.37 million shares. By comparison, short interest in fellow meme stock AMC is at 19.76%, and is 2.88% for electric vehicle maker Tesla.

Icahn has never previously disclosed a bet against meme stocks, but the billionaire investor slammed the fact that many were trading at "ridiculous prices" in May 2021.