- Investor Chamath Palihapitiya told CNBC on Wednesday that GameStop’s rally looks like the rise of Tesla.
- He said GameStop’s astonishing rise this week is another example of individual investors winning hedge funds.
- A joint effort by one Reddit community sent GameStop shares through the roof this week.
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GameStop’s unprecedented, Reddit-driven stock shake-up echoes Tesla’s years-long rally, billionaire tech investor Chamath Palihapitiya told CNBC on Wednesday.
The CEO of Social Capital and former Facebook CEO – who has made a name for himself in recent months by speaking out against Wall Street greed – jumped into the GameStop chase on Tuesday as Reddit users of the Wall Street Bets investment community of the site has teamed up to drive the share price of the trader to new heights.
He closed his job on Wednesday, he told CNBC, and plans to donate the original $ 500,000 and any profits to Barstool Sports’ small business aid fund.
The rise of GameStop looks like the rise of Tesla, Palihapitiya said, in the way that individual investors have won while skeptical institutions have been proven wrong.
Tesla’s share price has exploded by more than 700% in the past year and more than 13 000% since it became known in 2010, far exceeding the market as a whole and destroying Wall Street expectations throughout. Along the way, many Wall Street analysts scratched their heads. (Others threw in the towel and admitted that they had done it wrong.)
“Let’s look at Tesla. Who was right on Tesla? I’ll tell you who was right: every petty investor. I was right. Elon Musk was right,” Palihapitiya said.
“Let me tell you who was wrong: every hedge fund. Name after name, innovation, growth, people trying to do fundamentally useful things in the world, if that’s not the case in the form that Wall Street wants, they try organize against it. ‘
Read more: How hedge funds monitor Reddit posts to protect their portfolios after the crowd at Wall Street Bets helped grant Melvin Capital the short positions
GameStop’s rising share price – which peaked at $ 372.74 on Wednesday after rising nearly 10,000% in just a few months – has left retailers short of hedge funds.
Palihapitiya also pushed back against the idea that it is irresponsible for him and other traders to inflate GameStop’s stock. Instead, Palihapitiya sees the madness as an act of defiance against Goliath institutional investors who usually hold the reins of the stock market.
“The point is: just because you are wrong does not mean you have to change the rules,” Palihapitiya said. ‘Especially [since] when you were wrong, you were saved one last time. It is not fair.”