SHORT: Keanu Reeves stars in the new game Cyberpunk 2077. Foto: Bloomberg
14:28 – 20. dec. | Updated 15:03 – 20 Dec.
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Hedge fund Melvin Capital has won black on its short position after Cyberpunk 2077 was launched for Xbox and PlayStation earlier in December.
There have been high expectations for the new action game with Hollywood actor Keanu Reeves in the lead role, and many considered it one of this year’s game news in 2020.
Game fans have been waiting for a full eight years for the game to be launched, but when it finally hit the market, catastrophic errors, lousy graphics were revealed and the game crashed, sending the CD Projekt Red share straight down to Poland.
Melvin Capital took a short position in the company corresponding to 0.6 percent of the outstanding shares on 22 September. At that time, the share price was 400.90 Polish zlotys, equivalent to 943.30 kroner. After the game was launched on December 10, the share has plunged 39 percent to 271.40 zlotys, NOK 638.60.
The fall in the exchange rate corresponds to a profit of just under 25 million dollars, equivalent to 215 million kroner, according to the research company Breakout Point.
How to short-sell a stock
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- Short selling means that you borrow shares you do not own and then sell them.
- The money from the sale is placed in your brokerage account and can earn interest, but you must also pay a fee to the brokerage house, as well as an interest on the loan of shares.
- The short position is closed by repurchasing the shares and delivering them to the lender.
- As with traditional equity investments, the gain is the difference between the bid and ask price, minus costs.
- According to investment economist Mads Johannesen in Nordnet, customers who want to sell short must first fill out special short trade and margin loan forms, and pass a knowledge test.
- The account must also have sufficient capital to cover any losses, and short trading is only available for share and fund accounts.
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Can continue down
It appears that the fall in the CD Porjekt Red share may continue further down. The company has now been forced to offer refunds to users who have bought the game and who are not satisfied, according to Financial News.
However, the company itself goes out and says that the game is mainly made for the new consoles PlayStation 5 and Xbox Series X and S, and will be launched there in 2021. Now the game runs on the previous generation of game consoles, and that is probably where the problem lies.
Elon Musk also follows the fade and came out posting a picture from a Reddit thread where a player had written about his experience with the game.
Even after the fade with the Cyberpunk launch, the CD Projekt Red share has risen more than 4,900 percent since Cyberpunk was launched in May 2012. The company has also produced The Witcher game series which has become a huge world success.
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