GameStop stock is reportedly shorted by Carl Icahn

GameStop stock is reportedly shorted by Carl Icahn

The memes aren’t flying like they used to — and one billionaire is reportedly poised to take advantage.

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Carl Icahn in 2016.

Carl Icahn, a longtime investor, billionaire and chairman of Icahn Enterprises, reportedly has a “big bet” against video game retailer GameStop, Bloomberg reported, citing “people familiar with the matter.”

The sources added that Icahn began developing the short trade, which is when people bet against a stock — meaning they bet it will go down and then make money off it — after GameStop hit meteoric highs in January 2021.

This is interesting for the meme stock saga and market news in general. When a person or entity short a stock, they are borrowing a stock from some kind of middleman at a market price of, say, $100. You’ll have to pay it back eventually, but if you sell it for today’s price on the open market, you can buy back your old stock for less money.

So if the stock goes down to, say, $50, you end up paying back $50 per share – pocketing $50, minus various fees and interest that tend to accrue.

Ichan, according to the report, has a big bet of undisclosed size in GameStop that he bought when a frenzy of meme players took on Wall Steet and bought up shares in the floundering video game retailer GameStop, costing traditional players, such as hedge funds, about $20. billion dollars.

Related: Netflix Documentary ‘Eat the Rich: The GameStop Saga’ Explains the Meme Stock Saga That Cost Wall Street $20 Billion

GameStop’s stock price went from around $4 per share to a peak of around $483 per share in January 2021. Other businesses that got the meme treatment include AMTD Digital and Bed Bath & Beyond.

“The power dynamic has changed,” Guy Warren, CEO of FinTech ITRS Group, told The Trade of the event.

GameStop’s stock is still quite high, at $25 per share. When a company’s price is still up, but there may not be underlying business value, such as in assets or liabilities, some schools of investment believed that it is “not trading on the fundamentals”, i.e. its basic business fundamentals.

That’s reportedly what Icahn is betting on. “The investor, who has added to his position from time to time, is betting that GameStop’s stock is not trading on fundamentals and will continue to fall, the people said,” Bloomberg wrote.

There are hints that other people are looking to cash in on GameStop falling off the meme stock cloud. Insider reported on Tuesday that the short rate for the stock is up comparable to AMTD Digital, for example.

Icahn is No. 55 on Bloomberg’s Billionaires Index with a net worth of about $23 billion.

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