Chamath Palihapitiya close his position in Gamestop one day after joining the trading frenzy while he spoke up for the power of individual investors to compete with Wall Street hedge funds.

The CEO of Social Capital and former Facebook executive tweeted Tuesday that he purchased $150,000 worth of the stock.

Palihapitiya said, "I ended up closing out my position this morning, and I wanted to announce that I'm taking all the profits that I made plus my original position — I'm going to take $500,000 and I'm going to donate it."

Palihapitiya defended individual investors and the wallstreetbets Reddit message board for fighting against the short-squeeze on GameStop and a handful of other stocks and labeled the pros as hypocritical.

Allowing hedge funds to go short 140% of GameStop shares could be seen as irresponsible, he said. "To a normal person that doesn't make any sense. But to a Wall Street mathematician, that's the game that's been played. And that game came undone."

When there is a position like that when more people are betting against the stock then there is shares to back it and that stock begins to go up a short squeeze occurs. A short squeeze occurs as the shorters scramble to buy shares at the current higher prices to limit their losses. They return the number of borrowed shares and lose the price difference. This in turn drives the price higher then retail investors buy into the rise and it goes higher.

"Instead of having 'idea dinners' or quiet whispered conversations amongst hedge funds in the Hamptons these kids have the courage to do it transparently in a forum," he said. "What it proves is this retail [investor] phenomenon is here to stay. There are 2.7 million people inside wallstreetbets. I think they are as important as any hedge or collection of hedge funds."

"That edge is gone. Now all of a sudden, retail can be on the same footing and they don't have to be the 'bag holder' to Wall Street."

A veteran venture capitalist, Palihapitiya has had success lately sponsoring SPACs. (Symbol SPCE, a space tourism venture, has gained more than 115% in 2021).

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