Billionaire technology investor Chamath Palihapitiya told CNBC on Wednesday that it closed its position on GameStop, a day after joining the commercial frenzy surrounding the video game retailer.
He also defended the power of individual investors to compete with Wall Street hedge funds.
Social Capital CEO and former Facebook executive tweeted Tuesday that he bought GameStop call options worth $ 125,000 worth $ 115,000 after asking his followers on Twitter what they should buy. Calls are derivatives that give the buyer the right to buy a share at a set price. The trader makes money when the shares rise above the strike price. Shares of GameStop opened Wednesday at $ 354 a share, up more than 1,550% this year alone.
On Wednesday, on CNBC’s “Fast Money: Half-Time Report,” Palihapitiya said, “I ended up closing my position this morning and wanted to announce that I’m getting all the benefits I got plus my original position. It will take $ 500,000 and I will give them. “
Palihapitiya dismissed criticism from Wall Street over how individual investors join social media, particularly Reddit’s Walldreetbets message board, and GameStop, and a handful of other actions, such as pros, as hypocrites. . He said hedge funds try to push stocks all the time.
He said allowing hedge funds to be short on 140% of GameStop shares could be considered irresponsible.
Shares of GameStop initially jumped earlier this month after the company said Chewy co-founder Ryan Cohen was joining its board. As buyers got into the bag, running shorts were sent to the hills.
A small squeeze happens when a stock with a large block of short sellers starts to rise in price and shorts are shot to buy stocks at the current higher prices to limit their losses. They return the number of shares lent and lose the price difference.
Palihapitiya said the phenomenon surrounding GameStop shares, some more shares like AMC Entertainment, is much more than just a commercial story, arguing it is a setback for the establishment.