Gabe Plotkin lost 4.5 billion in GameStop mania
Melvin Capital was found in 2014 by Gabriel Plotkin. An Economics degree holder who chose his niche perfectly and ruled over it. Every King has to face a defeat; in Plotkin’s story, the GameStop short-selling was a fall.
GameStop the falling Company
GameStop a company that sold video games and Gaming equipment faced a steep fall in this pandemic. As the pandemic drowned every business it also flooded GameStop with an unexpected loss. The gaming was completely virtual and it was easily accessible with one’s mobile. When the pandemic came this trend was rocketed, leaving GameStop an undesirable loss.
Melvin Capital swept off the feet
Melvin Capital pulled a technique to put GameStop on its feet. It decided short-selling of shares. According to the plan, it would profit the Melvin Capital very much but a Reddit Committee member shattered the company by flipping things up.
In a Reddit group when there had been a group chat about GameStop’s short-selling methodology, the group members decided to buy the shares which would make the short-selling members unable to purchase the high priced shares. The members in the group agreed for two reasons; one, they believed it was undervalued and two, they want to prove a point to short sellers. This move shocked every fund house and shark of the stock market.
A bankrupt building his house
There was a rumour going on that Melvin filed bankruptcy after this incident. It was cleared that this was just a word on the street. It was more clear when Gabe renovated his house in Miami. Who would renovate their house after facing a 4.5 billion loss? Not a person who is facing bankruptcy.
Standing on own feet
To rescue Melvin Capital investment of 0.72 and 2.75 billion was made by Kin Griffin Citadel and Steve Cohen in exchange for non-controlling revenue shares of the fund. The loss did not stop him from going forward in the business.