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. Short-selling hedge funds lost $838 million in GameStop, according to data firm S3 Partners.
. Ihor Dusaniwsky, S3 managing director of predictive analytics, mentioned that we should anticipate short covering in this stock since it had a 100/100 squeeze score before todayโs trading session.
. The stockโs rapid surge appeared to have been sparked by โRoaring Kitty,โ who had previously rallied a group of day traders to invest heavily in the video game retailer in 2021.
Short sellers were left reeling on Monday as the astonishing surge in GameStopโs stock resulted in losses nearing $1 billion, as reported by S3 Partnersโ data.
GameStopโs stock surged by 74%, causing short-selling hedge funds to lose $838 million in mark-to-market value, according to data firm S3 Partners.
Ihor Dusaniwsky, S3 managing director of predictive analytics, mentioned that we can anticipate a surge in buying activity for this stock due to its high squeeze score of 100/100 before todayโs trading.
The unexpected surge in the stock appeared to be influenced by โRoaring Kitty,โ who previously rallied a group of day traders to invest in the gaming stock in 2021, a moment that became significant in Wall Streetโs chronicles. Keith Gill, known as โRoaring Kitty,โ shared a photo on X showing a video gamer leaning forward in their chair, symbolizing their dedication to the game. This marked his first post on the platform since 2021.
The meme stock craze saw regular investors targeting short sellers and hedge funds that were bearish on GameStop and other companies, leading them to close their short positions and push the prices of the stocks higher.
As per FactSet, the current short position in GameStop shares is over 24% of its freely available shares for trading, which is also referred to as the float.
GameStop short sellers have already lost a whopping $1.24 billion in May, and thatโs just counting Mondayโs losses! This news comes straight from S3, and itโs definitely not good for those betting against the company.
Dusaniwsky mentioned that buy-to-covers linked to the squeeze will contribute to the rise in GMEโs stock price. However, we should also anticipate new short sellers joining this trade, as GMEโs stock prices at or above $30 will be appealing entry points for them.
Short selling is a clever tactic where investors borrow stocks at a specific price, hoping that the market value will drop below that level when they have to return the borrowed shares.
On Monday, it wasnโt just GameStop that saw a surge in its meme stock status. AMC experienced a 15% jump, while Reddit traded 9% higher.
Dusaniwsky warned that short sellers could face a rough and brutal journey with these stocks.
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