London-based hedge fund White Square Capital went out of business altogether after making wrong-way bets on GameStop and AMC Entertainment, another popular short seller target last year. The trading frenzy in GameStop stock and the massive short squeeze that occurred in January 2021 dealt a 49% capital loss to the hedge fund in the first quarter of last year.
One of the largest short sellers in the GameStop trade, Melvin Capital, was forced to close its position in GME in January 2021 due to GameStop’s soaring valuation. Multiple hedge funds ended up closing shop after sustaining massive WallStreetBets-driven losses. Reddit traders were hugely successful in their attempt to force hedge funds to liquidate their short position in GameStop. More than a year ago, the GameStop saga began when traders on Reddit banded together to organize mass buying in certain stocks in a bid to initiate short squeezes in the market. Since the focus has also slowly returned to GameStop’s actual commercial performance, headwinds for the stock are only going to grow! Successive decline in short interest However, the short interest trend indicates that the likelihood of a (big) short squeeze is very low. In some cases, investors even suggest that we could see a “mother of all short squeezes”, or MOASS.
GAMESTOP SHORT SQUEEZE FULL
"We didn't come because of shorts, we were here because of the brand name," a retail trader with the username 'ApeBeyondTheMoon' wrote on investor-focused forum Diatel Photography/iStock Editorial via Getty ImagesĪ full year after shares of the original Reddit meme stock, GameStop ( NYSE: GME), exploded higher, many WallStreetBets readers still expect a big short squeeze. Wedbush raised its price target on GameStop's shares to $6.50 from $5.30 after the results, as the brokerage said the lower cost structure reduces the risk of ongoing losses. Short sellers betting against GameStop have lost $610 million since the start of the week, analytics firm Ortex estimated, adding that about 24% of GameStop's publicly available shares were in short position. When there is a rush of demand from short sellers looking to exit bearish bets due to a rise in a stock's price, it pushes prices even higher, resulting in a short squeeze. Still, Mould said the share surge "looks to be the result of good cost control rather than top-line growth, which is not ideal".Īnother favorite among retail investors - Carvana Co (CVNA.N) - rose 11% after the used-car retailer said it expects a smaller core loss in the current quarter.Īmong other highly shorted meme stocks, AMC shares were up 2.7%, Koss Corp (KOSS.O) climbed 6.8%, and the Roundhill MEME ETF (MEME.P) rose 0.5%. store is shown in Encinitas, California, U.S., May 24, 2017. The stock hit its highest level in more than four months with 54 million shares changing hands by 1:32 p.m. stock among retail traders, according to J.P. "Luckily, this go-around is not due to meme investors, but an actual tangible fundamental event," said David Wagner, portfolio manager at Aptus Capital Advisors, who does not have a position in the stock. Investors took this as an early sign of a turnaround for GameStop, whose core business of selling new and pre-owned videogame disks is shrinking as consumers move to downloading games digitally or streaming. Grapevine, Texas-based GameStop surprised Wall Street analysts on Tuesday evening by reporting strong profits in the fourth quarter, thanks to a 16% drop in costs. "Crypto, meme stocks, IPOs, SPACs and other, speculative assets all peaked a long time ago and the easy-money frenzy of 2020-21 now looks like an aberration on price charts, not the start of a brave new world," said AJ Bell Investment Director Russ Mould.
However, not everyone was convinced that the surge would kick off another round of extended gains. A number of those names were up on Wednesday. GameStop, AMC Entertainment Holdings Inc (AMC.N) and several other names were at the heart of a meme-stock frenzy in 2021, which was driven by small investors coordinating on social media. March 22 (Reuters) - Meme stock GameStop Corp (GME.N) surged nearly 41% on Wednesday as the video game retailer's first profitable quarter in two years squeezed bearish investors and sparked off a rally in other stocks popular among retail traders.
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