Billionaire investor Carl Icahn is reportedly betting big that GameStop shares will fall
- Investing legend Carl Icahn holds a sizable short position in GameStop, according to Bloomberg.
- Icahn reportedly started building the position in January 2021 as retail investors piled into meme stocks.
Carl Icahn started shorting GameStop as individual investors piled into meme stocks and still holds a significant position in the video-game retailer, Bloomberg has reported citing people familiar with the matter.
The billionaire investor reportedly started building his position in January 2021, when GameStop shares rocketed from $61 to an all-time high of $483 in just one week. The size of Icahn's position is not clear, the Bloomberg report Monday said.
GameStop stock has lost 79% 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 piled into GameStop and other meme stocks during the coronavirus pandemic, using forums like Reddit's WallStreetBets to coordinate their efforts to hit institutions that had shorted the retailer.
That led to so-called "short squeezes" that badly damaged hedge funds including Melvin Capital, which said in May that it would be shutting down after losing billions of dollars on GameStop.
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.
Data from Fintel suggest 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.