Short sellers close GameStop positions with huge losses

CNBC's Bob Pisani looks ahead to the day's market action and the recent focus on huge short position that are in certain stocks and the decision to then go long on those stocks to force those that are short to cover, squeezing them ever higher. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Melvin Capital closed out its short position in GameStop on Tuesday afternoon after taking a huge loss, the hedge fund’s manager told CNBC’s Andrew Ross Sorkin.

GameStop, hedge funds’ most-hated stock, was targeted by an army of retail investors who marshaled forces against short sellers in online chat rooms. In the Reddit forum “wallstreetbets” with more than 2 million subscribers, rookie investors encouraged each other to pile into GameStop’s shares and call options, creating massive short squeezes in the stock.

CNBC could not confirm the amount of losses Melvin Capital took on the short position. Citadel and Point72 have infused close to $3 billion into Gabe Plotkin’s hedge fund to shore up its finances. On Wednesday’s “Squawk Box,” Sorkin said Plotkin told him that speculation about a bankruptcy filing is false.

GameStop shares have soared more than 400% this week alone to $347.51 apiece, driving its January gains to 685%. The stock was worth just $6 four months ago.

Shares of the brick-and-mortar video game retailer popped another 134% on Wednesday, pushing the company’s market cap to $21 billion.

GameStop was the single most traded name in the U.S. stock market on Tuesday, topping Tesla and Apple, even though they are 81 and 233 times larger in market cap terms, according to Deutsche Bank strategist Jim Reid.

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