- GameStop and AMC short-sellers have lost $930 million on their positions over the last five days, according to data provider ORTEX.
- Short positions for the stocks remains high with AMC at 18.3% of free float and GameStop at 21.8%.
- The short-seller squeeze is exactly “what the Reddit army is hoping for,” said ORTEX’s co-founder.
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According to the data, GameStop and AMC short-sellers lost $930 million on their positions over the last five days of trading as both stocks rallied. Monday alone, AMC shorts lost $210 million and GameStop shorts lost $227 million.
Short positions in the stocks remains high, which causes “large losses” for anyone with a short position, ORTEX co-founder Peter Hillerberg told Insider in an email. AMC short interest is at 18.3% of free float and GameStop short interest is at 21.8%, according to ORTEX.
“The sharp price increase can cause short position holders to try to close their positions by buying back the shares, causing additional demand which in turn can cause the share price to go up further,” Hillerberg said.
“This is what the ‘Reddit army’ is hoping for,” he said.
Read more: The GameStop mania driven by Reddit traders isn’t simple market trolling. It’s a populist movement threatening to disrupt the financial system to a degree Occupy Wall Street only dreamed of.
Shares of both companies fell Tuesday, according to Investing.com data.
Before that, AMC was on a multi-day rally after Redditors on Wall Street Bets and other subreddit groups pushed for a short squeeze in the meme stock. On Twitter Monday, the phrase #SqueezeAMC was trending. That trend, Hillerberg said, indicates, “this is a large and very vocal community.”
Adam Aron, CEO of AMC – the world’s largest cinema chain operator – thanked Reddit and Robinhood traders on an earnings call earlier this month for boosting the stock. So far this year, shares have rallied roughly 500%.
The popular trend of meme stocks began with GameStop, though. In January, an army of Reddit day traders pushed the shares to rally from single to triple digits in an effort to squeeze short sellers.
Shares hit their lowest in a month on May 11, sinking to $136.50, and have since rallied, trading at around $175 Tuesday.
The company nodded at Redditors last week in a tweet that was later deleted in which an astronaut sat on the moon, a likely reference to a popular Reddit phrase about the stock price going “to the moon.”
Amid the months-long saga, GameStop has seen a management shakeup, with activist investor Ryan Cohen joining the board and CEO George Sherman announcing his departure. The company has also strengthened its balance sheet, eliminating $216 million in debt.