Chamath Palihapitiya jumps on the GameStop bandwagon

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

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Investor happily looking at rising share price on laptop

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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 (NYSE: GME) stock. In a post on Twitter (NYSE: TWTR) Tuesday, Palihapitiya said:

"Lots of [GameStop] talk, soooooo .... We bought Feb $115 calls on [GameStop] this morning. Let's gooooooo!!!!!!!!" 

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 100ks 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 January 11 that activist investor and Chewy (NYSE: CHWY) 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Danny Vena has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Twitter. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Chewy, Inc. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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