Short Sellers Gear Up For Another Crack At Small Investors’ Favorite Stocks

Short Sellers Gear Up For Another Crack At Small Investors’ Favorite Stocks
Andrew Rummer

almost 3 years ago1 min

Mentioned in story

Back in January and February, short sellers – who make money when prices decline – were forced to flee the market as the WallStreetBets Reddit forum led a crusade to deliberately buy heavily-shorted stocks like GameStop and AMC Entertainment in an effort to drive up their price. 

Hedge funds like Melvin Capital who had been betting on declines suddenly ended up on the wrong side of these trades – losing huge sums. The episode pushed some traumatized shorts to exit the market entirely for fear of provoking the Reddit mob. 

But new data from VandaTrack, plotted above, shows that short interest (in yellow) on the stocks most popular with smaller investors has jumped back up, reaching levels not seen since the GameStop saga hit the headlines in January. It appears the Melvins of this world are back for another crack at these retail favorites. 

This table shows companies where short interest – or bets against the stock – have climbed most over the past two months. If war once more breaks out between the WallStreetBets disciples and the hedge funds, expect some of these names to feature heavily.

Table of most shorted retail stocks
Source: VandaTrack, Bloomberg
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