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Majority of bets against GameStop have already been made, data shows

Yahoo Finance's Alexandra Semenova breaks down data from S3 indicating that there are only 3 million shares of GameStop available to be sold short.

Video transcript


- Our investors are increasingly betting against meme stock favorite, GameStop. Yahoo Finance's Alexandra Semenova has more on this. Alexandra.

ALEXANDRA SEMENOVA: Well, guys, anyone wanting to enter the GameStop short trade is likely out of luck. The majority of short selling on the meme stock darling has already been done. That's according to our friends over at S3 Partners. While existing short sellers may still be able to add to their positions, and maybe a few new short sellers can even enter, there is not enough stock left for borrowing or in order to execute any large short trades.

The video game retailer's, of course, back in the spotlight this week, after Bloomberg reported that billionaire investor Carl Icahn apparently still has a large short position in the company. GameStop is down about 30% year-to-date, but apparently Icahn believes that the stock has further to fall and is holding onto that position. But when it comes to traders who are feeling inspired by that and wanting to enter as well, it is too little, too late for them.

S3's research found that 95% of available stock is already being used to cover shorts. This means that there will not be an influx of new GameStop short selling to drive down the stock price, because there is not enough stock loan supply. And it's already severely limited. As we know, short sellers bet on a stock's decline by borrowing shares of a stock whose price they believe will fall, and then sell it back with at a lower price with the goal of pocketing the difference. Short interest in GameStop now stands at about $1.3 billion, with nearly $53 million shares shorted, per S3-- and of course, not all outstanding shares are made available to short.

- Yeah, so it sounds like a huge position on here, especially by Carl Icahn. I remember, back in the day 10 years ago, when I got into video, I was covering-- he was in a feud with Bill Ackman over--

- Herbalife.

- Herbalife.

- That was a huge one. It sounds like he doesn't have a lot of wiggle room here. This trade has to work out, or he could get squeezed in a classic short squeeze. Any insights on that?

- Well, exactly, Jared. The first thing that people were wondering here when they heard that report is, you know, is there a possibility that they can execute another short squeeze into the end of the year? Well, not exactly, because shorting GameStop is all about timing, and Icahn's timing here is in his favor. A short seller who got into GME in January 2021 is sitting on a really hefty mark-to-market profit. This means that it will be really difficult to squeeze them out of their position, which is the case for Icahn here.

- Good research as always, Alexander Semenova. Appreciate it.