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Short squeeze alert: GameStop stock set to soar

Short squeeze alert: GameStop stock set to soar
Elmaz Sabovic

Just as many thought that the GameStop (NYSE: GME) short squeeze was over, as it posted over 35% loss in just one day (considering both premarket and trading session losses), it seems that GME stock is back at it again, with gains of almost 10% in the premarket.

GME stock pre-market gains. Source: Google Finance
GME stock pre-market gains. Source: Google Finance

The stakes are higher as many institutional players have decided to bet against the stock, as the shorting activity is at a high level of 24% or over 64 million shares.

Level of GME stock short interest. Source: Fintel
Level of GME stock short interest. Source: Fintel

Such a high short interest level and a premarket surge have created perfect conditions for another GME stock short squeeze.

Financial institutions haven’t learned their lessons

Andrew Left, founder of Citron Research, announced he has resumed shorting GameStop despite taking a 100% loss on a previous short during the 2021 squeeze. Left started shorting GameStop again this week after shares surged due to cryptic posts by investor Keith Gill (aka Roaring Kitty) on X.

Left described the new short position as much smaller than his 2021 bets and emphasized that no trader would heavily short GameStop now.

In 2021, Left was a prominent figure in the GameStop short squeeze, in which hedge funds, including Melvin Capital, lost billions against retail investors from the r/WallStreetBets subreddit. He later revealed that his fund covered most of its short at a 100% loss.

Left mocked Roaring Kitty and highlighted that prominent hedge fund managers like Gabe Plotkin and Steve Cohen are still thriving. 

A recent GME short squeeze was worth billions

It is estimated that the latest GME short squeeze has caused short sellers to lose over $2 billion in the previous trading session this week while simultaneously adding over $3 billion to GameStop’s market capitalization.

In the coming days, traders will find out whether this short squeeze follows suit or has a much weaker effect.

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