GameStop (NYSE: GME) shares closed at $26.70 +0.40 (1.52%) on November 23, recording marginal gains after reports emerged billionaire investor Carl Icahn is still short-selling the stock leaving investors wondering whether another potential short squeeze could be on the cards before the end of the year.
S3 Partners analyst Ihor Dusaniwsky noted short interest in GameStop now totals around $1.3 billion, which accounts for approximately 20.5% of the float.
However, data from S3 Partners shows that 95% of available stock borrowing has already been utilized to cover shorts, leaving just 3 million shares available to be sold short.
“The vast majority of GME short selling has already been done, existing short sellers will be able to add some more exposure to their positions and new short sellers may enter the trade — but there is not enough stock left to borrow to execute large trades in the stock,” S3’s Ihor Dusaniwsky said in a note.
GME chart and analysis
In particular, GME has been trading in the $21.89 – $34.99 range for the past month, which is pretty broad, and it is presently trading amid this range where prices have been stabilizing lately, which may give a decent entry opportunity. However, some resistance may be present above.
Resistance is observed at $26.89 from a trend line in the daily time frame, while a resistance zone from $27.60 to $27.64 is formed by a combination of multiple trend lines and important moving averages over different time frames. At the same time, $26.18 to $26.53 is the first support zone.
At the time of publication, GME was trading above (5.04%) its 20-day simple moving averages (SMA), although it’s still below its 50-day and 200-day SMA.
GME stock technical analysis
Interestingly, the short-term technical analysis (TA) for GameStop reveals that indicators on the 1-day gauges are primarily bullish. The summary gauge points to a ‘buy’ sentiment at 10; meanwhile, moving averages (MA) suggest a ‘buy’ at 8.
The oscillators also point to a ‘buy’ sentiment at two while the majority (9) occupy the ‘neutral’ zone, according to the data obtained from the market analytics platform TradingView on November 25.
On Wall Street, two analysts giving a year price target to GME estimate an average price of $16.00, a 40.07% decrease from GameStop’s current stock price.
Based on two analyst opinions, the consensus rating for GameStop is a ‘sell’ with one analyst advocating ‘hold’ and the other suggesting a ‘strong sell.’
GameStop short squeeze potential
Investors wanting to place new wagers against the meme stock favorite appear to have missed the boat. Short interest in the video game store has decreased drastically over the last two years as a direct result of one of the industry’s biggest and most high-profile short squeezes.
Per Dusaniwsky, short sellers do not hold enough GameStop shares to exert considerable negative pressure on the company in the near future without considerably rising borrowing costs.
Ultimately, GameStop’s price movement moving into the last weeks of 2022 will be determined mainly by purchasing demand rather than short selling, according to Dusaniwsky, who said that this would be the case since there is not a huge volume of shares available to borrow.
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