Billionaire tech investor Chamath Palihapitiya told CNBC on Wednesday that he had ended his position in GameStop a day after joining the trading frenzy surrounding the video game store.
He also defended the power of individual investors to compete with Wall Street hedge funds.
The Social Capital CEO and former Facebook manager tweeted on Tuesday that he bought $ 125,000 worth of $ 115 GameStop call options in February after asking his followers on Twitter what to buy. Calls are derivatives that give the buyer the right to buy a stock at a fixed price. The trader makes money when the stock rises above the strike price. GameStop shares opened Wednesday at $ 354 a share, more than 1,550% this year alone.
On CNBC’s “Fast Money: Halftime Report” on Wednesday, Palihapitiya said, “I quit my position this morning and I wanted to announce that I’m taking all the profits I’ve made plus my original position – I’m going to take $ 500,000 and I’m going to take it. to donate. “
Palihapitiya dismissed Wall Street’s criticism of the way individual investors band together on social media – most notably Wallstreetbets Reddit’s bulletin board, and the short-lived GameStop and a handful of other stocks like professionals – as hypocritical. He said hedge funds are constantly trying to push stocks.
He said it could be irresponsible to allow hedge funds to short 140% of GameStop’s stock.
GameStop’s stock initially skyrocketed earlier this month after the company said Chewy co-founder Ryan Cohen joined the board. As buyers plowed into stock, shorts were sent into the hills.
A short squeeze occurs when a stock with a large block of short sellers starts to rise in price, and shorts rush to buy stocks at current higher prices to limit their losses. They return the number of shares borrowed and lose the price difference.
Palihapitiya said the phenomenon surrounding GameStop stocks, a few other stocks like AMC Entertainment, is much more than just a trading story, arguing that it is another nudge for the establishment.