Betting big against GameStop

Billionaire investor Carl Icahn began shorting GameStop during the height of the meme-stock frenzy around January 2021 and still holds a large short position in the video game retailer, according to people familiar with the matter. Short positions are a strategy where an investor profits if the price of a stock falls.

Icahn started building the short position when GameStop was trading near its peak of $483 per share, said the people, asking not to be identified because the matter is private. GameStop has lost about 70% of its value from a January 2021 closing high.

GameStop became a poster child for so-called meme stocks when retail trading took off during the coronavirus pandemic, aided by no-fee trading apps such as Robinhood and fiscal stimulus. Individual investors, egging each other on in internet forums popular with millennial and Gen Z visitors, plowed money into GameStop in a push to burn money managers who bet against the retailer. At the time, young investors flooded chat rooms on Stocktwits and used memes and GIFs to pump bets on forums like Reddit's WallStreetBets.

That mania triggered parabolic stock rallies in GameStop stock despite gamers opting to download new titles instead of visiting stores, with the retailer saddled with more than $1 billion in debt and lease liabilities at one point. Since the craze, the company has been able to sell millions of shares in the open market, to help nearly wipe out its debt.