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The stake sold in GameStop shares fell to 39% of the float, from 114% in mid-January, according to data from IHS Markit. It is a S3 Partners Ihor Dusaniwsky’s tweet on Monday, short shares fell 35.2 million just last week.
GameStop has been big news in the markets for weeks after the stock became a target on Reddit’s Wall Street Bets forum on Jan. 11.
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It all started after Chewy activist investor and cofounder Ryan Cohen wrote a letter to the video game retailer arguing that changes needed to be made and new board members added to the company.
Then, Reddit traders discovered that GameStop had a high short interest rate and realized that it could force a short sale, causing stocks to skyrocket.
Since then, GameStop’s stock has skyrocketed about 1,625% in January and more than 400% just last week.
While the move has generated huge gains for WallStreetBets traders, it has also caused billions of losses to accumulate for short sellers and institutional investors, some of which have had to be bailed out.
Estimates from data provider Ortex on Friday showed that short sellers lost about $ 19 billion in GameStop alone in 2021. And even after Monday’s drop, short sales fell about $ 13 billion in January, according to S3 Partners.
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Still, the bloodbath for short sellers may be over, as it appears that Reddit traders have shifted their focus to silver.
Precious metal prices soared, causing silver miners to soar as well.
For weeks, Reddit traders took advantage of GameStop’s high short interest by flooding the stock with new buyers, causing sales to squeeze. Now, with several brokers limiting deals at the video game retailer and falling short sales, investors are not getting the same meteoric returns that have been seen in the past two weeks.
“Short squeezes can only last as long as there is a big short in a stock. Once that dissipates, the situation changes completely,” said Matt Maley, chief market strategist at Miller Tabak & Co.
GameStop fell 15% to $ 274.00 as of 11:46 am EST on Monday.