Is There Still Potential for Short-Squeeze Growth in GameStop Stock?

Is There Still Potential for Short-Squeeze Growth in GameStop Stock? ...

GameStop (GME) - Get GameStop Corporation Reports Short sellers were less enthusiastic in mid-June than they were in May. The stock briefly rallied in May and June, leading short sellers to reduce their positions.

When it comes to GameStop stock, there is still the possibility of additional short squeezes. Let's see how.

Is There Still Potential Short-Squeeze Potential in GameStop Stock?

CHRIS HAMILTON

The "Short Sale Transparency and Market Fairness Act" might be beneficial for GME and AMC, according to Wall Street memes (see how)

The Latest Short Interest Data from GameStop

The most recent official data on short-selling activities in GameStop stock shows a decrease in mid-June compared to the previous month.

On June 14, 21% of GameStop's float was shorted. That's roughly 14.51 million shares. However, on May 12, about 15.12 million shares were shorted.

Charles Lemonides, the managing director of ValueWorks' portfolio, told Reuters that hedge fund managers should be cautious about aggressively betting against meme stocks.

"There's been too much confidence among the shorts that these businesses are complete failures," said the speaker.

Get AMC Entertainment Holdings Inc. Class A Report Companies like GameStop and AMC Entertainment (AMC)are far from broke. On the contrary, both are now with solid balance sheets and are investing in growth initiatives.

GameStop short sellers are losing money, and they've been losing money since 2022.

GME Borrow Fees

GME's borrowing costs, short sellers' fees, and open short positions remain high.

The greater the borrow fees, the harder it is for short sellers to short stocks and the easier it is to become overwhelmed by buying volumes. In other words, there is a greater probability of a short squeeze.

Borrow fees were at all-time highs of over 108% as recently as June. Although less dramatic, the current rate of 32% is still significant, considering that, for most of the previous six months, borrow fees had remained at an average of 5%.

Figure 2: GameStop's borrowed shares data.

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GameStop is still "squeezable."

The current setup is favorable for GameStop stock investors looking for short squeeze opportunities. Although lower than at the beginning of June, GME stock stocks remain highly short. And borrowing rates are adequate to squeeze short sellers on any increases in buying volume.

And speaking of purchasing volume, there are still two possible triggers that might send the stock higher in the short term: the launch of GameStop's NFT marketplace in July and the expected stock split.

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not affect editorial content.)

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