GameStop and AMC actions bounce back. Short sellers got burnt again.

Text size

After a lackluster month for the actions of

AMC Entertainment Holdings

and

GameStop,

the two roared higher on Tuesday, burning short sellers along the way.

Tuesday,

AMC Entertainment

the stock (ticker: AMC) jumped 24% to $ 43.09 while

GameStop

(GME) closed 10% higher at $ 191.18. Both posted their highest close since July 9. GameStop stock is still down 10.7% since the start of the month, while AMC stock is down 24% in July, according to Dow Jones Market Data.

AMC and GameStop are the two main memes titles, which means their daily price movements are often unpredictable, more related to factors such as social media chatter, the vagaries of options and momentum trading, and the activity of short sellers. Several analysts have abandoned the GameStop hedge, arguing that it no longer trades on the basis of fundamentals.

Ihor Dusaniwsky, managing director of short sale data provider S3 Partners, said Barron he estimates that 75.8 million AMC shares are sold short, or about 15% of the shares available for trading. There has been some coverage as he estimates short stocks have fallen by around $ 4 million over the past week. But with the stock rising $ 8.47 on Tuesday, short sellers lost $ 642 million in mark-to-market losses on Tuesday alone, bringing year-to-date losses to 3.82 billion. dollars.

For GameStop, he estimates that about 7.9 million shares were sold short, or 14% of the shares available for trading, down from about one million shares in the past week. Based on those numbers, short sellers lost $ 139.8 million on Tuesday, bringing the cumulative losses to $ 6.32 billion.

AMC gave news to investors. Following the close on Monday, the company announced the addition of two former Pacific Theaters locations in the Los Angeles area. He also said he was in talks with other property owners about adding more closed locations. Consolidation would be good for AMC, but it would take bold assumptions to justify the current levels of the stock.

There was no news for GameStop to justify the move, although President Ryan Cohen late Monday night posted a photo of him with chopsticks in the nose with the caption “PG-13”. For months, Reddit users have been speculating on the basis of every emoji, GIF, and photo that Chewy’s co-founder has shared on Twitter.

What comes next for memes stocks is guesswork. Wall Street pros have been calling for a crash for months, but stocks even have held up, albeit with a lot of volatility along the way. Ultimately, companies will have to use their cash flow and justify these high valuations. Not yet, apparently.

Write to Connor Smith at [email protected]