Get 40% Off
🚀 Our AI Picked 6 Stocks that Jumped +25% in Q1. Which Picks Will Soar in Q2?Unlock full list

Investor Einhorn says Palihapitiya, Musk poured 'jet fuel' on GameStop

Published 04/15/2021, 05:26 PM
Updated 04/15/2021, 06:25 PM
© Reuters. FILE PHOTO: Greenlight Capital's Einhorn speaks at a conference

By Svea Herbst-Bayliss

BOSTON (Reuters) - Investor David Einhorn said on Thursday that prominent venture capitalist Chamath Palihapitiya and entrepreneur Elon Musk threw "jet fuel" on the GameStop Corp (NYSE:GME) trading frenzy in January when the video retailer's shares rose by 2,000% and later prompted a hearing in U.S. Congress.

Einhorn, who runs hedge fund Greenlight Capital, also said U.S. lawmakers seeking answers to how day traders were able to wrest control of GameStop's share price from established hedge funds should probe regulators instead of investors.

Amateur investors organized on social media sites such as Reddit staged a stubborn buying spree three months ago, winning out over Wall Street hedge funds that had shorted GameStop's shares or bet that the price would fall.

The wild price swings caused heavy losses for hedge fund Melvin Capital, among others. U.S. lawmakers reacted by organizing a U.S. House of Representatives hearing in February where they quizzed hedge funds, a day trader and the chief of the online trading app Robinhood.

Einhorn on Thursday blamed Palihapitiya and Tesla (NASDAQ:TSLA) Inc's CEO, Musk, for throwing what he called "jet fuel on the GME squeeze." His comments appeared in a quarterly letter to Greenlight Capital investors which was seen by Reuters.

Representatives for Palihapitiya and Musk did not immediately respond to requests for comment.

Einhorn said it is appropriate for investors to discuss stocks.

"Investors discussing why they think GameStop (or any other stock) should go up or down ought to be encouraged," he wrote. "There is no reason to drag anyone before Congress for making a stock pick."

Einhorn said Palihapitiya, who appeared on TV in late January and dismissed criticism of day traders, might have been trying to harm Robinhood because it competes with fintech startup SoFi, which was backed by Palihapitiya.

And Musk, whose Tesla shares Einhorn has long bet against, waded in to the drama by tweeting "Gamestonk!!" and adding a link to the Reddit forum where day traders were discussing GameStop.

"If regulators wanted Elon Musk to stop manipulating stocks, they should have done so with more than a light slap on the wrist when they accused him of manipulating Tesla's shares in 2018," Einhorn wrote.

Einhorn said if lawmakers wanted to understand "why GameStop did what it did ... it would be better to call to account the absentee regulators and their philosophical backers."

© Reuters. FILE PHOTO: Greenlight Capital's Einhorn speaks at a conference

He told investors that his Greenlight Capital Funds were essentially flat in the first quarter, inching down 0.1%, while the S&P500 index gained 6.2%

Latest comments

Omg, why don't you go cry in your lambo and cover those shorts?! How about they look into the new superhero on the block, the dark pool? 💎👐🚀I love the stock
The issue here is not shorting and the hedge funds getting burned. The real issue which no one on Wall Street wants discussed is "Naked Shorts." These hedge funds are shorting stocks in an unnatural way. What is meant by this is they do not possess the shares, nor have they loaned them from holders of the stock for a fee or interest. They are naked, its like a wager, gambling they can force a stock down. Its manipulation and illegal in many countries, but not the USA. This reform has been resisted and those in the know have paid off or pressured the regulators to stay out. How, because they stack the regulators with their cronies. Pure and simple.
Never the fund managers fault. Always somebody else
Washington will pribably call another hearing on the hearingWhat a crockThe stock turned against the short seller. Take your losses as you take your gains
guy sounds salty as ****** he must of got short squeezed also
yep.. gone from being a billionaire to a millionaire 🤣🤣
He sure did. Hes known for shorting stocks. It wouldnt be the first time he got burned. Its pretty funny that Musk burned him twice
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.