Will DRS Trigger a GameStop Stock Short Squeeze?
The topic of DRS’ing shares (direct registration system) to trigger a GameStop short squeeze has been heavily discussed amongst the retail community.
DRS enables investors to register their shares through a system such as ‘computershare’ in book form entry directly with the issuer.
The premise is to starve lenders from allowing shares to be lent to short sellers.
No shares to short = organic price increase from retail demand.
Today, it seems more and more GameStop shareholders are jumping in on the bandwagon to secure their shares.
Some retail investors argue that DRS has not proved to create a positive impact on the stock.
GME stock ended 2022 down nearly -50%, shares are currently trading around $16.23 per share, respectively.
According to GameStop, shareholders registered 71.8 million shares via the transfer agent.
The question is, if more shareholders DSR their GameStop stock, will it create a short squeeze?
Let’s discuss it below.
How Many GME Shares are DRS?
According to GameStop, approximately 30% of GME’s float is registered with the Direct Registration System (DRS).
This equates to 71.3 million retail shares.
How much of GME’s float is owned by retail investors?
Nearly 70% of the float is owned by individual shareholders according to Vickers Stock Research.
This means nearly 40% of retail investors have not registered their GameStop shares through DRS.
It’s quite impressive to see the teamwork currently being demonstrated.
But will DRS trigger a GameStop stock short squeeze?
In the end, the goal shareholders are trying to achieve is to create massive price action here.
The debate also surfaced amongst AMC shareholders when CEO Adam announced during Q3 earnings that DRS will prevent the company stock from being shorted.
Majority of shareholders argued selling shares would be a slow process and that it hasn’t quite worked out for GameStop shareholders.
While DRS certainly prevents the company from being shorted, it’s only one piece of the puzzle for a GameStop short squeeze.
Shareholders will need to create massive buying pressure next.
GameStop Short Interest Today
Yahoo Finance is reporting 304.58m shares outstanding and a float of 258.65m shares, see the difference here.
GameStop’s short interest is currently being reported at 20.44% (float) and 17.96% of shares outstanding as of December.
GME’s short interest is considered high and is one of the key components to a successful short squeeze.
The short interest allows us to identify the percentage of investors betting against the stock.
A high short interest means any spike in price may trigger short sellers to close out their positions before accumulating losses.
When share prices rise and get out of hand in favor of the bulls, short sellers are incentivized to buy back their shares at a loss, breakeven, or potential profit (depending on when the position was opened).
This heavy buy-back of shares builds buying pressure which may result in a ‘short squeeze’.
Brief GameStop Short Squeeze History
On January 28th, 2021, GME shareholders were able to take GameStop’s share price to an all-time high of $483 per share before Robinhood halted further trading activity, particularly in buying the stock.
At the time, AMC surged from $2.50 to $22 per share and then five months later reached its all-time high of $72 per share.
However, GameStop’s short squeeze was well on its way to reach larger and unprecedented number figures prior to the halt.
This event sparked one of the most prominent events in the history of our financial markets.
It opened a door to a series of investigations.
Wall Street fraud, stock market manipulation, short and distort, and various conflicts of interest became the center of attention after the ‘meme stock’ frenzy.
Shareholders retaliated and spurred up a culture unlike anything that has ever been seen before.
Now, GME shareholders are doing whatever they can to keep their shares out of short sellers’ hands by direct registering their shares with Computershare.
Related: GameStop Stock – Big Year in 2023?
GME Shareholders Are Onto Something
The registration of 71.3 million GameStop shares is impressive.
But GME shares keep dropping.
Ultimately, it will be heavy buying pressure from retail investors that will trigger massive price movement in the company stock.
How soon will we begin to feel that Roaring Kitty sense of relief again?
Only time will tell, but I’m curious to hear your thoughts.
Leave a comment down below.
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Show CommentsThe large buying pressure you speak of would come from the short sellers closing the naked positions! Hence the oversold float.
If allowed to do this automatically oonbpurchase or easily on broker app. Would be impressed. Would rather see more info on shorting than us having to do all this excess work as we paid for shares and shorts didn’t.
Registering shares sounds like a good idea to reduce shares being borrowed to short. However, won’t SEC/DOJ have to actually prosecute fraud/naked shorting (selling unlimited fake shares to drive prices down) and impose actual penalties beyond just a slap on the wrist before it actually stops organized crime price manipulation down?
Well he is right,lately retail has just been sitting back watching it drop.there is no where near the pressure we had last year.
Tell everyone to disable stock lending in their account
Well, Keith. If it was so easy.
The reason DRS is gaining traction is the fact that your shares are being lent out by your neo-broker anyways, and if not directly lent out, used as locates for short-sales.
We have been in this for now 2+ years, you can imagine, we already thought of that lmao
Squeeze will only happen for GME and AMC once the blatant crime, control and corruption stops. Period.
Retail has done enough at this point. All the buying pressure by retail means shit all when the crooks run the show.
Let’s start a discussion! Leave your thoughts below.
I swear to God I am not reading another one of your articles if it says that retail needs to increase buying pressure.