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GameStop Corp. GME,
Stocks soared on Wednesday in an apparent short-term squeeze, but a short-selling news analyst doesn’t believe that’s the case.
GameStop shares jumped more than 60% on Wednesday – which would be its biggest single-day percentage gain, according to Dow Jones data – more than a week after short-term interest in shares of the video game retailer has exceeded the number of shares outstanding. In the last check, more than 125 million shares had traded hands in today’s session, against a 52-week average daily volume of 6.5 million shares.
While GameStop has 69.8 million shares outstanding, overdraft interest on the share rose to 71.2 million shares on Dec. 31 from 68.1 million previous shares, according to FactSet data. .
On Monday, GameStop stock finished up 10% after reaching a deal with activist investor RC Ventures to add three of its members to the board, and rose less than 0.1% on Tuesday. On Monday, the company also said holiday comparable store sales rose 4.8% and digital sales jumped 309%.
While noting that shorts were definitely part of the buying frenzy, Ihor Dusaniwsky – the head of predictive analytics at tech and financial analytics firm S3 Partners, which specializes in analyzing sales data. uncovered – said he disagreed that GameStop’s price spike was the result of a squeeze.
“The upheaval of GME’s board of directors and stronger holiday sales are causing a long-standing buying tsunami, which is the main driver of price developments,” Dusaniwsky said in email comments. “While I agree that we are seeing some shorts being squeezed out of their positions due to massive losses to market today, this sounds a lot like the chicken and the egg question – have long buys led to a short cover squeeze or a short cover squeeze leads to long lasting purchases? “
Dusaniwsky thinks it is the first.
“We won’t see a massive drop in short stocks over the next few days, rather a 10% to 20% drop that would mean 7 to 14 million stocks hedged, which is far from close to nearly 70 million shares traded this morning, ”the analyst said. “Long-time buyers are the main driver of the rise in GME’s stock price. “
GameStop shares have soared more than 500% in the past 12 months, compared to a 16% gain in the S&P 500 SPX index,
and a 42% increase in the Nasdaq Composite Index COMP,
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