Explainer: How were more than 100% of GameStop’s shares shorted?
John McCrank, 18 February 2021
NEW YORK (Reuters) – One area of focus from a U.S. House of Representatives panel on Thursday will likely be on the role short selling played in the GameStop market mayhem.
Executives from trading platform Robinhood and hedge funds Melvin Capital and Citadel will be grilled following the retail-driven trading frenzy that sparked wild gyrations in GameStop and other heavily shorted stocks.
Short selling, details of which are included in the memorandum here about the hearing, can be a positive move, as it can be used in hedging positions, more accurately valuing prices of stocks and exposing frauds, like Enron and Theranos.
But Vlad Tenev, broker Robinhood’s chief executive officer, recently pointed out that some of the stocks involved in the “meme stock” rally were more than 100% shorted, implying that more shares were shorted than were available to trade.
