Please ensure Javascript is enabled for purposes of website accessibility

Chamath Palihapitiya Jumps on the GameStop Bandwagon

By Danny Vena - Jan 26, 2021 at 1:16PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The high-profile SPAC investor is betting that the beleaguered retailer's stock price will keep rising.

Social Capital co-founder and CEO Chamath Palihapitiya has made a name for himself identifying excellent high-growth companies and taking them public using special purpose acquisition companies (SPACs).

Now, the noted investor is looking to profit from the recent gyrations of GameStop (GME 0.42%) stock. In a post on Twitter (TWTR -2.32%) Tuesday, Palihapitiya said, "Lots of [GameStop] talk, soooooo .... We bought Feb $115 calls on [GameStop] this morning. Let's gooooooo!!!!!!!!" 

Cheering man looking at a laptop.

Image source: Getty Images.

Buying calls is an options strategy investors can use when they believe a stock will rise. Palihapitiya's position suggests that he believes the stock could gain as much as 50% from Monday's close -- and do it in less than a month.

The post was a follow-up to one on Monday in which Palihapitiya said, "Tell me what to buy tomorrow and if you convince me I'll throw a few 100 k's at it to start. Ride or die."

GameStop has been a battleground stock in recent weeks. Shares were selling for as little as $17.25 earlier this month, but several catalysts conspired to send them soaring.

News broke on Jan. 11 that activist investor and Chewy (CHWY -1.28%) co-founder Ryan Cohen and two of his associates had gained seats on GameStop's board. Cohen's firm, RC Ventures, had amassed a 13% stake in GameStop last year, making it the company's second-largest shareholder. Cohen's success with online retailer Chewy has given investors hope that he could help steer GameStop toward similar e-commerce results. 

The drama took another turn late last week when a tug-of-war broke out between noted short-seller Citron Research and a group of investors on the subreddit r/WallStreetBets. Citron editor Andrew Left eventually threw in the towel on Friday as the short squeeze that the online group had sparked continued.

GameStop has gained more than 375% so far this year and was recently trading above $100 as investors bet on a turnaround for the company. Palihapitiya has now joined the fray.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GameStop Corp. Stock Quote
GameStop Corp.
GME
$96.06 (0.42%) $0.40
Twitter, Inc. Stock Quote
Twitter, Inc.
TWTR
$37.40 (-2.32%) $0.89
Chewy, Inc. Stock Quote
Chewy, Inc.
CHWY
$24.16 (-1.28%) $0.31

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.