Mark Cuban offered some words of wisdom to the Reddit traders who increased the price of GameStop stock and made headlines across the globe.
“Capitalism is a beautiful thing,” the billionaire tech entrepreneur told Fox Business. “It’s even sweeter when the power starts with the people.”
Cuban previously offered advice when GameStop Corp. shares plunged below $100 per share and barreled toward their steepest one-day decline on record on Feb. 2.
Shares of the Grapevine, Texas-based video game retailer fell by as much as 67% to $74.22 apiece on Tuesday before clawing back. They have collapsed by as much as 77% since Friday after Robinhood and other brokers restricted customers from making some transactions as a surge in volume strained the brokers’ abilities to cover clearinghouse deposit requirements.
PROVING GAMESTOP MANIPULATION WILL BE TOUGH FOR SEC, OTHERS
“Sometimes its [sic] expensive to learn,” Cuban posted on group’s message board. “Anyone who has traded for a while has learned an expensive lesson they couldn’t [sic] afford. I know i [sic] have.”
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Members of the group WallStreetBets on the message board site Reddit banded together to squeeze short-sellers that were betting on GameStop’s demise. Their efforts drove the value of GameStop shares up by 1,529% from Jan. 12 through last week, and caused duress for a number of hedge funds.
One such fund was Melvin Capital, which lost more than 30% in the first few weeks of this year, at least partially due to its bet against GameStop. The losses forced the fund to take a $2.75 billion cash infusion from fellow hedge funds Citadel and Point72 Asset Management.
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GameStop isn’t the only stock that has been the subject of a Reddit-induced short squeeze. AMC Entertainment Group and Bed Bath & Beyond Inc. were among the other companies to see big run-ups in their share prices that were induced by a plan to stick it to the short-sellers. Their stock prices have also plummeted in recent days.
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As for Cuban, his advice for the Reddit army was to stay the course in their beliefs.
“No disruption is easy or happens in a straight line,” he posted. “Stay with it. I am a believer.”
Fox Business’ Jonathan Garber contributed to this report.