GameStop (GME) has had quite a week, an increase of almost 80% since Monday after news that board member and investor Ryan Cohen would play a key role in the company’s e-commerce strategy.
Bulls expects the presence of Cohen, who founded the pet retailer Chewy, to help the company fulfill the potential that GameStop fans believe it has, as it transforms from a brick and mortar business to something more modern.
GameStop bulls who see the company as an underrated and long-term game may not be paying much attention to stock movements, but it is difficult to miss the roller coaster ride. With equities rising on Wednesday, short interest rates continued to fall, perhaps after short sellers learned their lesson in the tightening of late January, losing billions.
But, according to Ihor Dusaniwsky, of analytics firm S3 Partners, the squeeze will continue.
“We should see GME’s tightening continue and more sales sold on the stock market as mark-to-market losses increase,” he told Yahoo Finance on Wednesday. “But as the stock continues its rapid rise, there will be short sellers waiting behind the scenes looking for entry points if this rise loses momentum and the GME stock price returns.”
Interest sold may have fallen, but it’s still significant: $ 2.76 billion with 11.18 million shares sold, 20.52% short-float interest or 17.02%, depending on how you calculate, according to Dusaniwsky. (S3 prefers the latter, as it does not count the synthetic longs created from a short sale. If this is confusing, S3 has a good explainer here.)
To put this in context, AMC Entertainment’s meme stock has a share percentage of 17.32% sold. Tesla, another notoriously short company, has 5.98% and Amazon 1.03%.
“This was not a week of profitable negotiations for GME short sellers after falling – $ 1.36 billion on Monday and Tuesday,” said Dusaniwsky. “[Wednesday’s] The + 7% price movement added another – $ 202 million in additional mark-to-market losses. “
In total, GameStop shorts lost $ 6.8 billion in the year, said Dusaniwsky.
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Ethan Wolff-Mann is a writer for Yahoo Finance with a focus on consumer issues, personal finance, retail, airlines and more. Follow him on Twitter @ewolffmann.