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GameStop Short Sellers Lose $1.24 Billion in May: What’s Next?

Demetrius Game Stop Article GameStop Short Sellers Lose $1.24 Billion in May: What's Next?
The meteoric rise of GameStop's stock has put short sellers in a precarious position, with losses totaling $1.24 billion in May alone. Monday's surge was particularly brutal, leading to an $838 million loss for hedge funds. The resurgence of “Roaring Kitty” on social media has reignited interest, echoing the historic 2021 trading frenzy. As meme stocks like GameStop and AMC continue to rally, short sellers are bracing for more turbulence.

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GameStop Short Sellers Lose $1.24 Billion in May: What's Next?

written By: Demetrius Brown

Fubu Radio investors, listen up! Short sellers in GameStop have faced significant losses this May, amounting to a staggering $1.24 billion, according to S3 Partners. The jaw-dropping rally on Monday alone caused nearly $1 billion in losses for short sellers as GameStop soared 74%, resulting in an $838 million mark-to-market loss for short-selling hedge funds.

“Squeeze-related buy-to-covers will push GME’s stock price higher. However, expect new short sellers to jump in as GME stock prices around or above the $30 level will be attractive entry points for short selling,” said Dusaniwsky. He further noted, “Expect short covering in this stock as it already had a 100/100 squeeze score prior to today’s trading.”

The sudden advance in GameStop’s stock was seemingly triggered by “Roaring Kitty,” also known as Keith Gill, who famously encouraged an army of day traders to pile into the gaming stock in 2021. This episode made Wall Street history. Gill posted a picture on X of a video gamer leaning forward on their chair, signaling he’s taking the game seriously—his first post on the platform since 2021.

The “meme stock” frenzy saw individual investors targeting short sellers and hedge funds who were pessimistic about GameStop and other companies, forcing them to cover their short positions and driving up the price of the target stocks. Currently, the short position in GameStop shares amounts to more than 24% of all its shares freely available to trade, also known as the float, according to FactSet.

GameStop wasn’t the only stock making moves on Monday. AMC surged by 15%, and Reddit shares traded 9% higher.

“Short sellers may be in for a bumpy and bloody ride with these stocks,” Dusaniwsky added.

Stay informed and keep an eye on these market dynamics as meme stocks continue to shake things up!

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