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Lucas Jackson / Reuters
- GameStop short sellers lost $ 3.3 billion in bets to the stock in 2021, S3 Partners said.
- Losses were around $ 1.6 billion as of Friday alone, as the stock was up 51%.
- GameStop has exploded as traders on Reddit drive bullish momentum to extraordinary levels.
- Watch the GameStop trade live here.
Investors who bet against GameStop and the army of bullish traders have already lost billions in 2021.
Year-to-date losses to the market for GameStop shorts reached $ 3.3 billion as of the close of trading on Friday, according to data from financial analysis firm S3 Partners. Losses totaled nearly $ 1.6 billion on Friday alone, as stocks climbed 51% higher in the close.
GameStop’s stock continued to climb as Reddit users and day traders extended the unusual momentum trade into its third week. Shares of the company initially surged on Jan.11 after agreeing with an activist investor to add three new directors to its board. The day’s gains attracted many retail traders, including members of the popular WallStreetBets subreddit.
Online posts urging other investors to join the trade have since driven inordinate bullish momentum for GameStop. The stock traded 115% higher at 10:40 a.m. ET on Monday and is up more than 500% since the start of the year.
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While some believe the gains have been fueled by massive massive squeeze, demand for short selling remains strong. About 72 million shares – or 140% of GameStop’s float – were sold short on Friday, according to S3. Over the past seven days, the number of stocks sold short has climbed 883,000, although the stock has skyrocketed.
“There has been a queue of new short sellers looking to get short exposure in GameStop after its recent ramp-up,” Ihor Dusaniwsky, general manager of predictive analytics at S3, told Insider, adding that brokers had not been able to meet demand for stocks to be sold short.
Short sellers and Wall Street have struggled to understand the phenomenon of retailers. Only one company, Telsey Advisory Group, has downgraded its shares since their soaring earlier this month. Street’s median price target is $ 11.96, implying an overall crash expectation of 81%.
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Andrew Left of Citron Research, one of Wall Street’s more outspoken GameStop shorts, said on Friday he would no longer comment on the action. Left posted a video on Thursday criticizing bullish day traders and saying the stock would drop to $ 20 soon. WallStreetBets members berated the left with derogatory memes and comments.
The short seller said on Friday that an “angry mob” of online traders harassed him and attempted to hack his Twitter account, causing him to end his comments on the stock.
Left kept his thesis short – but what started out as moderate, short pressure has evolved into a “vice-grip” on those who bet against GameStop, Dusaniwsky said. He added that the action’s prolonged rally would force the shorts to reconsider their confidence in their position and likely kill a large number of GameStop bears.
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