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Next big squeeze? GameStop’s short interest hits new highs

Next big squeeze? GameStop's short interest hits new highs
Paul L.

Despite the short-term bearish sentiment surrounding GameStop (NYSE: GME) stock, it continues to capture the market’s attention, driven by recent short-squeeze activity.

In the latest development,

In this line, according to data shared by Unusual Whales in an X post on June 9, the reported short volume as of June 7, 2024, has soared to 103,785,384 shares, surpassing the January 22, 2021, figure of 97,123,046 shares.

GameStop short interest volume chart. Source: Unusual Whales

The renewed spike in short interest suggests that many investors are wagering on a decline in GameStop’s stock price despite the potential for another squeeze driven by retail traders. 

The dynamics of such a high level of short interest create a precarious situation. Any positive news or coordinated buying efforts could trigger a rapid price escalation as short sellers rush to exit their positions to avoid losses.

Gamestop’s poor financials 

While retail investors remain intrigued by the meme stock, GameStop’s financial performance presents a contrasting narrative. 

The company reported a loss of $32.3 million in revenue of $882 million for its fiscal first quarter, ending in June, marking a decline from the previous year’s loss of $50.5 million in revenue of $1.2 billion. The company cited dwindling sales of hardware, software, and collectibles.

In response to market volatility, GameStop has outlined plans to stabilize its finances and support future endeavors.

The retailer intends to sell 75 million shares of common stock, with proceeds earmarked for general corporate purposes, including potential acquisitions and investments. This follows the successful sale of 45 million shares from its May 17 offering, generating $933.4 million in gross proceeds.

Return of Roaring Kitty 

At the same time, excitement surrounding GameStop has been reignited following Keith Gill’s, also known as “Roaring Kitty’s,” return to the spotlight with his first YouTube livestream in over three years. 

Gill, a pivotal figure in the 2020 and 2021 meme-stock frenzy, has historically influenced investor sentiment through engaging content. His recent online activity has already led to significant fluctuations in GameStop’s stock price, surging by as much as 47% on June 6.

With ongoing volatility surrounding GameStop stock, the impact of current short interest levels, particularly with influential figures like Gill reemerging, remains key for market observers.

Meanwhile, GME was trading at $28.22 by press time, having corrected almost 40% in 24 hours. On a year-to-date basis, the stock remains bullish, having rallied about 70%. 

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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