Hedge fund manager David Einhorn blamed venture capitalist Chamath Palihapitiya and Tesla Ing. (NASDAQ: TSLA) CEO, Elon Musk, because he “aircraft fuel” on the GameStop Corp. (NYSE: GME) trades madness in January this year, according to a Reuters report.
what happened: Einhorn said he believes the GameStop short press in January was fueled primarily by Palihapitiya and Musk, according to the report, which quoted Einhorn’s comments in a quarterly letter to Greenlight Capital investors published Thursday.
The founder of Greenlight Capital said that Palihapitiya may have had an incentive to harm the popular trading platform Robinhood, as it competes with the fintech company SoFi, which is supported by Palihapitiya.
Einhorn further said that if regulators wanted Musk to stop manipulating shares, “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 also said U.S. lawmakers should investigate regulators instead of investors if they want answers on how traders are able to gain control of GameStop’s share price from established hedge funds.
See also: GameStop Fame WallStreetBets now offers discussions on Bitcoin, Ethereum, Dogecoin
Why it matters: Shares of video game retailer GameStop and other heavily shortened stocks such as AMC Entertainment Holdings Inc. (NYSE: AMC) soared in January amid a rally fueled by retailers belonging to the subreddit channel, r / WallStreetBets is offering the shares to create a short push.
GameStop shares traded wildly in January in a battle between short sellers and retailers. The wild price changes in the heavily shortened shares, among others, caused the hedge fund Melvin Capital Management large losses.
Billionaire Chamath Palihapitiya joined the trade frenzy at the end of January by announcing that he had bought options in GameStop with a strike price of $ 115. Musk later dropped out of the GameStop drama by ‘Gamestonk !!’ with a link to WallStreetBets. Major investors such as Musk, which has 43 million followers on Twitter, have caused huge movements in equities.
In response to the short print drama, the US House of Representatives held a special hearing in February in which the CEOs of Reddit, Robinhood, Melvin Capital and the hedge fund Citadel Securities testified about the circumstances surrounding the GameStop short print and the factors which is Robinhood’s decision to limit GameStop purchases.
Price action: GameStop shares closed nearly 6.1% lower at $ 156.44 on Thursday, while Tesla shares closed 0.9% higher at $ 738.85.
Read next: GameStop, Sticky and more: these are the stocks added to the Dave Portnoy-backed ETF
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