GameStop short sellers are now down a whopping $1 billion in May according to new data from S3 Partners analysts.
Shares of the gaming company soared more than 66% on Monday, hitting nearly $37 from a previous close of $17.39.
GME stock is currently up more than 183% in the past month alone.
Media speculates GameStop shares rose due to the return of iconic investor, Keith Gill, AKA Roaring Kitty.
Shares of AMC Entertainment stock also rose by more than 50% on Monday, hitting $4.44 from its previous close of $2.95.
The movie theatre stock is currently up 79% in the past month alone.
According to financial analytics firm, S3 Partners, GameStop short sellers have accumulated approximately $1 billion in paper losses.
“GameStop shorts are down in estimated $1 billion in May paper losses with todays +50% pop in early trading,” said Matthew Unterman on X.
“@S3Partners multi-factor squeeze risk score has been registering a max of 100 every day since May 3rd.”
S3’s Squeeze Score overlays the significant components for a squeeze, higher financing costs and unrealized losses, to their Crowded Score to identify shorted stocks with higher short-side volatility and identifies stocks that have the necessary conditions to be “squeezed”.
Squeeze Scores of 70-100 identify squeezable stocks, and scores over 90 have a significantly higher risk of a squeeze and the potential for the resulting buy-to-covers to pushing stock prices even higher, according to the companies website.
With Roaring Kitty back, does this mean meme stocks are about to blow up again based on hype and momentum again?
I’d love to hear your thoughts on this. Leave a comment down below.
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Free Live Daily Updates: AMC Short Interest Today + More.
Community, I’m going to be updating this list of momentum stock and their short interest and utilization daily (AMC short interest, BBIG, MULN, BIOR, GME, APE, and many others).
Be sure to bookmark this page for daily AMC short interest updates and more.
Other metrics being updated daily will include the cost to borrow, shares on loan, + short squeeze scores.
If there are other heavily shorted stocks you’d like me to update daily, please leave a comment below and I’ll be sure to look into them before adding them to the list!
– Frank Nez
What has investing in the stock market taught you?
Market News Daily – Analyst says AMC and GME Have Highest Squeeze Potential.
S3 analyst says AMC Entertainment (NYSE:AMC) and GameStop (NYSE:GME) stock have the highest squeeze potential in the market.
“As the broader stock market has been on a tear for about a month, things are looking grim for investors with big short positions in stocks like AMC Entertainment Holdings Inc. and GameStop.”
AMC’s and GME’s short interest data is what ignited the massive rallies in 2021.
Today, both AMC and GME have a high short interest of 26.69% (AMC) and 20.73% (GME).
AMC’s short interest was only 25% when it surged to its all-time high of $72 per share in June of 2021.
Short interest dropped to 14% as short sellers closed positions only to pick right back up throughout 2022 and 2023.
Both AMC and GameStop shares have been suppressed from rising through heavy dark pool trading and suspiciously through naked short selling, evident in high FTDs (fails-to-deliver).
AMC Entertainment, the largest movie theatre chain in the world, continues to innovate and creatively raise cash with a mission to erase its debt accumulated during the pandemic.
Hedge Funds Face Big Risks
Ihor Dusaniwsky, head of predictive analytics at financial technology and analytics firm S3 Partners, compiled a list of those most vulnerable stocks, headed by such names as AMC (AMC), GameStop Inc. (GME), Coinbase Global Inc. (COIN) and CarMax Inc. (KMX).
“One factor that is also killing profits for short sellers is the borrowing costs on stocks that no one is willing to part with, and the stock that figures highest on that list is AMC.”
AMC’s cost to borrow recently skyrocketed to more than 1,000% with its cost to borrow average currently being reported at 928%.
“Short sellers want to short the stock, but they are not able to get a stock borrow locate and therefore cannot execute their short on the street,” Dusaniwsky told MarketWatch in an interview.
“But, when any stock borrows become available — lenders, brokers know they can charge inflated fees as there is huge demand for the name.”
“In this case there is an AMC–[preferred stock] APE arbitrage trade that will be profitable if the conversion occurs soon because the high financing costs are eating into those expected profits every day, including weekends,” Dusaniwsky said.
But the S3 analyst isn’t the only one stating there is big squeeze potential in AMC and GameStop.
Strategist Says Mother of All Short Squeezes is Here
Market News Today – Analyst: AMC and GME Have Highest Squeeze Potential.
Interactive Brokers Chief Strategist Steve Sosnick says there’s big demand to short AMC Entertainment stock.
He says the biggest reason aside from the company’s fundamentals is its new merge with its equity (NYSE:APE).
“It’s very hard to keep the momentum in these things because economic reality does take hold.
Bed Bath & Beyond, at one point was the best performing stock on the board until reality set in and they began defaulting, averted bankruptcy, but using a deal that is so dilutive that it’s unavoidable.”
Sosnick says AMC is in a very special situation because of the proposal to merge APE with AMC common shares.
“Right now we’re seeing such a demand to short AMC partly because of its difficulties but partly because of the special situation.
The borrow rate, it costs you 700% to borrow the shares overnight — if you can find them,” said the Interactive Brokers Chief Strategist on Yahoo Finance.
Market News Published Daily
Market News Today – Analyst: AMC and GME Have Highest Squeeze Potential.
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Market News: At least 30% of GameStop shareholders have registered their shares.
GameStop says at least 30% of its shareholders have registered their shares with the Direct Registration System (DRS).
According to the filing, approximately 30% of GME’s float is registered equating, to 71.3 million shares.
The efforts from retail investors come as a means to prevent manipulative short seller attacks.
GME stock is trading at $21.66 on Monday with trading volume surpassing the company’s average volume of 5.1 million.
Shares of GameStop (NYSE:GME) are up +26% this year-to-date, a great start to the new year.
On Monday, GameStop shares have risen more than 11% intraday where shares rose to nearly $22.50.
GME’s short interest is currently sitting at 23.55% with approximately 95 million shares out on loan.
This means that despite DRS, the game retailer continues to be heavily shorted.
GameStop Ownership Structure
How much of GameStop’s float is owned by retail investors?
Nearly 70% of the float is owned by individual shareholders according to Vickers Stock Research.
GameStop Ownership Structure – Franknez.com.
This means nearly 40% of retail investors have not registered their GameStop shares through DRS.
Yet it’s very possible the percentage of GameStop shareholders who have registered their shares has grown in the past months.
GameStop’s Chair Ryan Cohen himself owns more than 12% of GME shares.
These are held through Ryan’s holding company RC Ventures, which Vickers considers to be Institutional ownership (12% on graph).
Is DRS working out for GameStop shareholders?
It very well could be, considering GME shares are up nearly +26% this year despite having a high short interest rate.
AMC Entertainment (NYSE:AMC) stock on the other hand is up +44% this year despite DRS being significantly less popular within shareholders.
The movie theatre stock is also heavily shorted at 21.96%.
And according to AMC’s CEO, roughly 90% of shareholders own the float.
Where is GameStop headed in 2023?
30% of GameStop Shareholders have registered their shares according to GameStop.
GME stock has the potential to have a big year in 2023.
GameStop continues to be a popular company amongst retail investors, primarily due to the massive community of shareholders who are looking to squeeze short sellers again.
During the spark of the ‘meme stock’ frenzy, GameStop shares rose to $483 per share, a superior all-time high.
But shareholders are not convinced the stock is done running.
2023 opens up new possibilities for GameStop as e-commerce, NFTs, and Web 3.0 gaming continues to grow.
While the company may benefit from arming itself with more short-term capital, GameStop enters the new year with positive cash flow, an incredible start for the company as many continue to struggle.
Market News: Conflicts of interest arise – #CitadelScandal
David Inggs is Global Head of Operations at Citadel and is responsible for all products across asset servicing, billing, cash management, clearing, and has a board seat at the DTCC.
The conflict of interest has raised big concerns amongst the retail investor community online as Citadel has been a leading and one of the biggest short sellers in the stock market.
On January 28th, 2021, The DTCC waived $9.7 billion of collateral deposit, limiting institutional losses and limiting retail profits during the ‘meme stock’ frenzy.
The organization allowed several naked shares to flood the market prior to the massive jump in share prices only to help financial institutions in the end.
Citadel and Melvin Capital who shut down last year, lost billions during the event.
Melvin was crippled throughout 2022 from its severe losses in GameStop the year prior.
Had the DTCC not stepped in, the hedge fund would have closed that same year.
“Anyone shorting AMC or GameStop is out of their mind. Wallstreetbets is too powerful, and trying to bet against them right now is just giving them more ammo”, said Jim Cramer.
Since the halt of ‘meme stocks’, the retail community has been uncovering a variety of conflicts of interest too big to ignore.
Who is David Inggs?
David Inggs is Global Head of Operations at Citadel and is responsible for all products across asset servicing, billing, cash management, clearing, Collateral Management, Reconciliation & Control and Settlements and is on the Board of Directors at the DTCC.
Prior to joining Citadel, David served as Chief Operations Officer of E*TRADE where he led operations globally across Trade Execution, Global Clearing, Middle Office and Shared Services, among other functions.
David spent most of his career at Goldman Sachs, where he was a Managing Director and held numerous leadership positions over the course of a decade, including Global Head of Clearing Operations and Head of Credit Default Swaps and Equity Derivative Operations.
David also worked at Morgan Stanley, where he served as an Executive Director and Head of Global Bank Loans, in addition to work in credit derivatives and collateral management.
The Global Head of Operations at Citadel has worked for every major criminal financial institution that has been too big to face serious consequences from fraud or market manipulation in the past.
Retail investors say this is market injustice and regulators are part of the problem.
Who is the DTCC?
The DTCC (Depositary Trust and Clearing Corporation) is an American post-trade financial services company providing clearing and settlement services to the financial markets.
The DTCC processes trillions of dollars of securities on a daily basis.
As the centralized clearinghouse for various exchanges and equity platforms, the DTCC settles transactions between buyers and sellers of securities.
The information is recorded by its subsidiary, the NSCC.
After the NSCC has processed and recorded a trade, they provide a report to the brokers and financial professionals involved.
This report includes their net securities positions after the trade and the money that is due to be settled between the two parties.
Clearing corporations such as the DTCC may receive cash from a buyer and securities or futures contracts from a seller.
The clearing corporation then manages the exchange and collects a fee for this service.
The size of the fee is dependent on the size of the transaction, the level of service required, and the type of security being traded.
Investors who make several transactions in a day can generate significant fees.
This means every naked share that has been created on the ‘short side’ has been recorded and bypassed by the DTCC/NSCC, all for a fee.
A press released was published advising of the circumstances that occurred during the time ‘meme stocks’ were halted.
The DTCC waived $9.7 billion of collateral deposit requirement on January 28th, 2021, limiting institutional losses and limiting retail profits.
While AMC Entertainment stock was able to surge months after the January event, GameStop shareholders were strongly affected by the halts.
Retail investors say they feel cheated from regulators who failed to let the short squeeze play out in their favor.
Conflicts of interest such as David Inggs’ involvement with Citadel and the DTCC could be seen as a detriment to market integrity.
In an interview with ‘We The Investors’, SEC Chairman Gary Gensler said one proposal they’re looking at this year involves tackling conflicts of interest in the financial markets.
Citadel processes more than 40% of retail’s orders through PFOF (payment for order flow), and with a bias towards short selling, gives the hedge fund an incredible advantage over the common investor.
Should the involvement between both Citadel and the DTCC be considered a crime?
Or is this just a coincidence?
Leave your thoughts below.
Market News Published Daily
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