Citron Research, a well-known short seller, has announced that it is no longer shorting GameStop (GME) stock. This decision follows the recent rise in GME's stock price above the $30 mark, which saw a 22.8% intraday rally, bringing the current trading price to $30.49, according to Google Finance data.

In a June 12 post on X (formerly Twitter), Citron cited the "market's irrationality" and the "cult-like" behavior of GameStop's shareholders as the primary reasons for closing its short position. The firm acknowledged that while it does not believe in a fundamental turnaround for GameStop, the company's substantial cash reserves of $5 billion provide enough financial runway to maintain shareholder confidence:

"Citron is no longer short $GME. It’s not because we believe in a turnaround for the company fundamentals will ever happen, but with $5 billion in the bank, they have enough runway to appease their cult-like shareholders."

Despite the positive momentum in GME's stock price, Wedbush GameStop analyst Michael Pachter maintains a bearish outlook, setting an "underperform" rating with a 12-month price target of $11. This target suggests a potential correction of over 60% from the current price. Nonetheless, Citron decided to exit its short position, acknowledging the current market's irrational behavior:

"Despite Wedbush setting an $11 target today, we respect the market's irrationality. After all, Dogecoin remains a $20 billion entity. While the increased share count might temper the mob mentality, Citron will be watching from the sidelines for now."

Citron drew a comparison to Dogecoin (DOGE), a memecoin with a market capitalization of $20.2 billion, driven primarily by social media hype rather than intrinsic value or utility. This parallel underscores Citron's view that the valuation of assets like GameStop and Dogecoin is influenced by speculative behavior rather than fundamental analysis.

GameStop's recent financial maneuvering includes raising $2.14 billion through an "at-the-market" equity offering, selling 75 million GME shares. This capital raise coincided with renewed interest in the stock, partly fueled by a live stream from Keith Gill, also known as Roaring Kitty, who played a significant role in the original GME short squeeze. Gill's live stream, his first in over three years, contributed to the stock's resurgence. In a June 2 Reddit post, Gill disclosed holding $181.4 million worth of GME stock and call options, including the purchase of five million shares for $115.7 million and $65.7 million in call options betting on the stock price to be at least $20 by June 21.

Citron's statement referred to Gill’s live stream as "an insult to capital markets," reflecting the firm's frustration with the speculative forces at play. As Citron steps back from its short position, it remains to be seen how the market's dynamics will unfold, especially with the continued influence of retail investors and social media-driven hype.