Webull Reports AMC Hard to Borrow with Whopping Fee
Webull is reporting AMC Entertainment (NYSE:AMC) hard to borrow (HTB) with a fee rate of 436.26%.
We’ve seen AMC’s borrow fee dramatically increase to 244% and even get deemed the #1 stock with the highest borrow fees by S3 Partners.
AMC’s borrow fee rate is the annual fee hedge funds are paying to borrow AMC stock and short the company.
According to these numbers, hedge funds are burning several tens of millions of dollars every month shorting AMC Entertainment.
But Webull’s HTB fee rate works a little differently – more on that in just a moment.
A sharp rise in AMC stock will result in bigger losses for short sellers, though company shares are currently down more than -37% in the past month and -0.38% this year-to-date.
And with AMC’s legal settlement with APE (NYSE:APE) and approved reverse stock split from shareholders, there’s a lot of uncertainty of how shareholders will respond to the new market changes.
Many shareholders are growing resentful of CEO Adam Aron’s strategy, which has done nothing but dilute the stock and cause bigger losses for investors.
Still, the CEO’s strategy may be the only solution to end Wall Street’s short thesis.
But investors want more — the commencing of a short squeeze.
Webull Hard to Borrow Explained
According to Webull, “a hard-to-borrow stock is used to indicate what stocks are difficult to borrow for short sale transactions.
If you are short selling a ”hard-to-borrow” stock, you’ll have to pay a daily stock borrow fee, which changes based on the stock’s price and its availability.
Each stock’s hard-to-borrow fee rate varies depending on the volatility and scarcity of the stock.
Note that a fee rate change can significantly impact the profit or loss of any short sale.
If the stock you’ve shorted is classified by Webull as hard to borrow, the fee rate you pay on the loan of these stocks may vary depending on a number of factors, including availability and supply and demand of shares.”
Stonk-O-Tracker is currently showing there are 0 shares available to borrow through the borrow fee rate has been between 286% and 351% since the beginning of the week.
Ortex is reporting a cost to borrow of 232.72 (updated daily).
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Who is benefiting from these fees?
What stops big brokerages/hedge funds from naked shorting (selling unlimited fake shares) and not paying any borrow fees. My understanding is FINRA can identify naked shorting, but rarely does anything about fail to delivers (FTDs – which basically seem to be naked shorts kept open indefinitely). Is it accurate that naked shorts don’t show up in shorting totals by stock posted by SEC (so 1% may be 200% – ie 2021 Gamestop?)?
Leave your thoughts below!