These shorts are on fire. Again.
For a third straight day, shares in mega-meme stocks GameStop
and AMC Entertainment
soared to massive gains on Wednesday as retail traders piled into what is now another short squeeze on hedge funds and other institutional investors shorting the stock.
GameStop was up almost 16%, pushing it to price levels not seen since early March, while AMC popped almost 19%, putting it back near $20 a share after increasing by roughly 95% in May, the highest it has been since January’s wild short squeeze that introduced the world to the idea of meme stocks.
Both stocks wildly outperformed the major indices
which remained relatively flat on the day.
On social media, talk of “Diamond hands”, meant to convey an intense aversion to selling shares, turned to a new iteration of “Diamond fists”, encapsulating the more militant outlook on “HODLing” shares to keep pumping them up in the face of hedge funds that new data shows are still shorting both stocks even after getting pummeled in January’s squeeze.
“The short interest in GameStop is still remarkably high compared to the average company on the US stock market,” said Peter Hillerberg, co-founder and chief technical officer of Ortex Analytics.
According to Hillerberg, short positions in both GameStop and AMC have remained at high levels after falling in the wake of January’s squeeze, with more than 20% of GameStop’s entire float being shorted at one point on Wednesday.
But after creeping back up over the course of a few weeks, shorts have started to jump ship this week as retail investors on social media platforms like Reddit used the scarcity of available shares to tilt the trade back in their favor.
“Again, this is not the squeeze. This is just resets of their FTDs,” posted user Damselindistress on Reddit board r/Superstonk, referring to the theory that hedge funds failed to deliver on their shorts the first time. “It proves, again, that their shorts were never closed.”
And while both GameStop and AMC have used retail investor interest to fuel their growth by issuing new equity to pay down major debt loads, the most recent squeeze shows that the line between retail and short sellers is more of a taut rope.
“There is often a causality with the short interest and the share price,” mused Hillerberg. “This week, that causality has gone crazy.