Citron Research suggests GameStop should buy Esports Entertainment
- Citron Research suggests GameStop should buy Esports Entertainment.
- Short-sellers faced £583.85 million of combined loss on GameStop.
- GameStop shares were reported about 10% down in after-hours trading.
In a tweet on Thursday, Citron Research said that GameStop Corp. (NYSE: GME) should consider buying Esports Entertainment Group Inc (NASDAQ: GMBL). As per the short-seller, acquiring the online gambling firm will help introduce GameStop to millions of new customers and bolster its financial footing.
Esports Entertainment opened at a per-share price of £12.78 on Thursday and closed the regular session at £13.20 per share after touching a high of £17.07 per share. In comparison, the stock had started the year at £4.82 per share.
Citron Research’s founder Andrew Left’s comments on Thursday
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According to Citron’s founder Andrew Left who has shares in Esports:
“It would be an easy acquisition for GameStop to tuck in right now. Some people say it would be a ‘Hail Mary pass’, but I think it would be a major pivot.”
Left’s comments come almost a month after he called GameStop an ‘outdated’ brand and said that he was betting against it. Left said:
“Six weeks ago, this brand was (close to) being dead. Now it’s a hot brand that can raise money and re-establish itself as a strong player. What’s changed? I realise that there are millions of kids in this country who like to gamble. If they combined, as a short seller, I wouldn’t even think about touching that.”
Responding to the short-seller’s comments, Esports confirmed that it was not in talks with GameStop over a potential merger. GameStop is yet to make an official statement. Esports’ vice president of strategy, Jeff Cohen, also commented on the news on Thursday and said:
“We have talked to GameStop in the past about areas within Esports where we might be able to collaborate, but we haven’t had any discussions around acquisitions.”
Short-sellers faced £583.85 million of combined loss on GameStop
In related news, data from Ortex (financial analytics firm) suggested that short-sellers faced £583.85 million of combined loss on GameStop’s stock on Wednesday.
GameStop shares opened more than 85% up on Thursday but lost 35% before the closing bell. The stock was reported another 10% down in after-hours trading. Including the price action, GameStop is now trading at £72 per share versus £12.31 per share at the start of the year.
In the last week of January, GameStop had touched a high of £248 per share. The stock performed massively upbeat in the stock market last year with an annual gain of close to 250%. Here’s what you need to know about stock market volatility.
At the time of writing, GameStop is valued at £5.41 billion.