It started last Friday when GameStop shares rose more than 50% after users on the Reddit forum WallStreetBets (WSB) ganged up to buy the stock in response to a number of short calls, most notably from Andrew Left of Citron Research, who predicted the stock would drop to $20. (GameStop isn’t the only one: AMC and BlackBerry are two of the other heavily-shorted stocks that retail investors have boosted this week via social media.) On Monday, GameStop stock surged another 130%, then was halted, and closed the day up 18%. On Wednesday, it gained 134% to close at $347. One week ago, it was at $39.
Enter Mets fans.
As the Financial Times reported on Monday, Cohen’s hedge fund Point72 just joined Ken Griffin’s Citadel in putting $2.75 billion into Melvin Capital, the hedge fund of Gabe Plotkin, a former Cohen protege. Melvin is having a terrible January (double-digit percentage losses, according to the FT) that just got a lot worse: it’s one of the funds with a huge short position on GameStop.
Cohen’s Point72, which had already invested $1 billion in Melvin, added $750 million to Citadel’s $2 billion, and now has a significant non-controlling stake in Melvin.
Mets fans are concerned about that. Might the GameStop short squeeze that is hitting Melvin, and by extension Cohen, hurt Mets payroll?
According to Cohen: No.
New Mets owner Steve Cohen had to bail out Melvin Capital because a bunch of stock trading kids on Reddit massively pumped up GameStop, putting Melvin's $13 billion at risk of disappearing.
If that leads to the Mets cutting payroll, it would be the most Mets story ever.
— Mike Masnick (@mmasnick) January 27, 2021
On Tuesday night, amid gleeful Twitter jokes about the toll WallStreetBets was taking on short-sellers, hedge funds, and possibly on the Mets, Cohen appeared to take it all in stride: “Rough crowd on Twitter tonight,” he tweeted. “Hey stock jockeys keep bringing it.”
Cohen then replied directly to a Twitter user who asked him, “Is this Gamestop business effecting the Mets payroll? I mean that's the main story in all of this.”
Cohen replied, “Why would one have anything to do with the other.”
Why would one have anything to do with the other
— Steven Cohen (@StevenACohen2) January 27, 2021
On Wednesday night, the New York Times reported that Point72 is down 15% so far this year, in part because of its investment in Melvin Capital.
Still, Cohen is the richest owner in baseball, worth more than $14.5 billion—more than three times the net worth of the No. 2 richest, Washington Nationals owner Ted Lerner.
Cohen’s $2.47 billion purchase of the Mets in November, amid a global pandemic, set a new record for the sale price of any U.S. pro sports team—and didn’t even include the team’s regional sports network, SNY. (If you ask Dodgers co-owner Alan Smolinisky, Cohen’s Mets purchase is the latest proof that the pandemic won’t ding pro franchise values: “It’s such a finite resource, and there are so many people that want to be a part of it.”)
Whatever Cohen’s losses directly from the GameStop short squeeze hitting his former protege’s hedge fund, Mr. Met need not worry about it.
And in a statement to the media on Friday after he deleted his Twitter account, Cohen reiterated that promise: “This week’s events in no way affect our resources and drive to put a championship team on the field.”
This story was updated on Jan. 30 at 10:55pm EST.
Daniel Roberts is an editor-at-large at Yahoo Finance and specializes in sports business. Follow him on Twitter at @readDanwrite.