ORTEX co-founder Peter Hillerberg said that short positions in the two stocks remain high. This means that anybody with a short position will suffer large losses.
According to the company’s data, AMC short interest is at 18.3% of free float. Meanwhile, GameStop’s short interest is at 21.8%.
Despite the high short positions, shares of both companies declined Tuesday. “The sharp price increase can cause short position holders to try to close their positions by buying back the shares, causing additional demand which in turn can cause the share price to go up further,” Hillerberg said.
Before that, AMC enjoyed a multiple-day rally Reddit’s Wall Street Bets members pushed for a short squeeze in the meme stock.
In fact, the hashtag #SqueezeAMC trended last Monday. Hillerberg noted that Wall Street Bets “is a large and very vocal community.”
Adam Aron is the CEO of AMC, which is the world’s largest cinema chain operator. He thanked Reddit and Robinhood traders during an earnings call earlier this month. He thanked the groups for boosting AMC stock, which is now 500% up this year.
GameStop Survived Short Sellers
Meanwhile, GameStop remains a very active stock. Shares hit their lowest in a month on May 11, sinking to $136.50, and have since rallied, trading at around $175 Tuesday.
GameStop briefly acknowledged the stock supporters by posting a tweet of an astronaut sitting on the moon. This is likely a reference to Reddit’s phrase “going to the moon” which means stock prices going higher.
As a result of Wall Street Bets’ efforts, GameStop’s short sellers lost billions amid the share rally this year. This forced some hedge funds to prevent further losses by exiting their positions despite losing money.
The popular trend of meme stocks began with GameStop earlier this year. Last January, a group of Reddit day traders caught wind of an attempt to short GameStop. Instead, they pushed the shares to rally from single to triple digits to squeeze short-sellers.
Cleaning House
GameStop is in the midst of cleaning the house in order to improve its bottom lines. Recently, the video game retailer strengthened its balance sheet and eliminated $216 million in debt.
Activist investor and Chewy founder Ryan Cohen joined the board in order to shake up operations at GameStop and transition it to online retail. In addition, CEO George Sherman announced his departure.
Watch the CNBC television video reporting that GameStop, AMC excitement surges again on Reddit:
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Do you engage in short-selling? Given the GMA and AMC squeeze, do you still plan to short sell stocks?
Let us know what you think about short selling in general. Share your comments in the comment section below.
Its legit. Just another part of the trading game. The big institutions that really control the market do it all the time and count on small traders to do the same so they can make the big money.
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4 Comments
It manipulates the market
change the rules, require a 6 month ownership hold on the stock shorted!
It’s completely legitimate.
Its legit. Just another part of the trading game. The big institutions that really control the market do it all the time and count on small traders to do the same so they can make the big money.