What a day for Jumia? Wallstreetbets just killed Citron Research’s criminal short-selling report that tagged Jumia fraud and plunged the shares of the e-commerce giant shortly after getting listed on NYSE.
The same report was rejected by over 3 million amateur traders on Reddit, a popular forum in the US, who took aggressive opposite trades on GameStop following Citron Research publication.
Citron Research sell positions plunged into the red zone. The firm and other short sellers lost a combined $19.75 billion in January after the price of GameStop surged by 870 percent in the last two weeks.
Background Story of Citron Research
Citron Research is a firm that specializes in demonizing companies, especially small companies and then sells their stocks, saying they will fail. Sometimes these negative publications are not true but because it creates panic and negative sentiment around those stocks, a lot of investors will start dumping their shares out of fear. Andrew Left, the founder was ban from trading in China and Hong Kong but not in the USA as his activities were seen as legal despite its damages.
Citron went after Jumia and the price of Jumia’s shares plunged from around $45 per share to $2 per share. Presently, trading at $57.65 per share, another evidence of Citron Research wrong projections.
However, Citron met its waterloo when it took on GameStop. Amateur traders that number over 3 million on a thread popularly referred to as Wallstreetbets on Reddit, refused the report and took several buy positions while encouraging others to do the same
In few days, Citron’s position worth billions of dollars turned red. Andrew Left, the founder went to court to halt their activities but it failed as they fought back and were allowed to resume trading.
In a Youtube video, he said “I took the lawsuits, I went to court, I took the questions to lay the foundation. So obviously, I support any opposing opinions.”
“But what I never did was I never got personal, I never got nasty, and I never threatened a corporate executive, their family, or any shareholders. It was always business.” That was in response to a series of threats that trailed the shutdown of their thread on Reddit and suspension of trading on GameStop by several trading platforms.
Citron Research has now announced it would suspend its 20 years of short-selling research that brought sadness to several small businesses and to executives.
Left also has some words of advice for amateur traders, “When you make your profits, make sure you put some away for the IRS,” he warned.
“That money is not all your money. But, at the end of the year, you do owe tax money.”
GameStop rose from $17 per share to $300 within two weeks.
