GameStop short-sellers lost $1.6 billion in a single day as Reddit traders rebelled against them
Ben Winck, 25 January 2021
Investors betting against GameStop and the army of bullish retail traders have already lost billions in 2021. Mark-to-market losses for GameStop shorts on a year-to-date basis reached $3.3 billion when trading closed on Friday, according to data from the financial-analytics firm S3 Partners. Losses totaled nearly $1.6 billion on Friday alone as shares rocketed 51% higher into the close.
GameStop stock has continued to climb as Reddit users and day traders have extended the unusual momentum trade into its third week. The company’s shares initially leaped on January 11 after it agreed with an activist investor to add three new directors to its board. The day’s gains drew in swaths of retail traders, including members of the popular WallStreetBets subreddit.
Online posts urging other investors to join the trade have since driven outsize bullish momentum for GameStop. The stock traded 115% higher as of 10:40 a.m. ET on Monday and is up more than 500% year-to-date.
Though some think the gains have been fueled by a massive short squeeze, demand for shorting the stock remains strong. About 72 million shares – or 140% of GameStop’s float – were shorted as of Friday, according to S3. In the past seven days, the number of shares shorted climbed by 883,000, though the stock soared. “There has been a queue of new short-sellers wanting to get short exposure in GameStop after its recent run-up,” Ihor Dusaniwsky, the managing director of predictive analytics at S3, told Insider, adding that brokers had been unable to meet the demand for shares to sell short.
