I wondered if people were shorting Gamestop as it reached new highs, and it appears they have been.
Short Interest is Still High
GameStop short interest is 39% as of the open this morning. While this is much lower than the 120% levels we saw last week, there are still a decent amount of shorts who would need to cover if the price shoots up again.
Also, remember that short interest was artificially driven down by the massive volume from last week. Short interest equals shares short divided by the float, meaning short interest would decrease if float increases, even if no one covered. This could mean that there are still a large amount of shorts who need to cover.
New Shorts Created This Week
Plenty of traders entered short positions over the last two days thinking that the short squeeze is over. If they end up being wrong and GME spikes again, they may have to cover, which would cause the price to spike again.
A counterattack of short sellers looking to take advantage of the price rise has stepped in. If the redditor camp holds the line, they could trounce a whole new set of shorties.
Losses to hedge fund short-sellers is at 12.5 Billion so far.
LONDON (Reuters) – Shorting shares in GameStop, the video game retailer at the centre of the ongoing retail trading frenzy, cost hedge funds a total $12.5 billion over January, data from financial analytics firm Ortex showed on Monday.
The losses were inflicted by small-time investors who piled into GameStop, pushing up the shares and forcing many hedge funds to buy them back to cover losses. GameStop shares are up 1600% year-to-date.
Ortex data showed $5.9 billion worth of GameStop shares were out on loan as of Friday or 49% of the total freefloat.
Something similar is happening in Europe to Cineworld, which appears to be an AMC-type play
In Europe, short-sellers booked $28 million loss on their bets against Cineworld. Almost 24% of its freefloat is on loan.