How Likely Would a Short Squeeze Be for AMC, BBBY, or GME?
The AMC Short Squeeze
Here’s my quick take on AMC: I believe it’s quite likely we will see a short squeeze from AMC very soon.
AMC stock has been attracting lots of interest recently. Potential catalysts for the stock could include confirmation of rumors of Amazon's interest in acquiring AMC, AMC shareholders’ approval of the conversion of the EPAs to common stock, or AMC shareholders’ approval of a reverse stock split.
On the short side of things, due to the share price discrepancy between AMC Preferred Equity units (APE) and common stock, many traders see an arbitrage opportunity in going long APE and short AMC. That has put even more bearish pressure on AMC shares.
Data provided by S3 Partners indicate that, as of March 28, there was about $592 million in short interest in AMC, and about 25% of its total float was held short. The most surprising thing about AMC is the very high borrowing fees around the stock.
As the demand for short sellers in AMC is extremely high, fewer and fewer shares are available for borrowing and short sellers must pay increasingly expensive fees to borrow the remaining shares.
Currently, AMC borrowing fees stand at 250%. However, in late February of this year, fees were as high as a whopping 700% plus.
Yet, there is an estimate that short sellers are down about $250 million year-to-date in their trade short AMC. As AMC registers a high of about 26% year-to-date and reaches $5 levels, should the upward trend around the stock be fueled by speculation and socially mobilized investing trends, a large short squeeze is virtually certain in the near term.
The Bed Bath & Beyond Short Squeeze
On the other end of the spectrum, given the serious issues facing the company and a total lack of buying catalysts, Bed Bath & Beyond does not seem poised for a short squeeze any time soon.
Bed Bath & Beyond had an incredible start to the year. Shares rallied 150%+ between mid-January and early February; though BBBY started the year at just over $2 per share, the stock nearly reached $6 during the rally’s peak on February 6th.
This precipitous move was fueled by a general market rebound in early 2023 and helped further by a surge in more speculative assets across the board.
While its stock price was surging, however, Bed, Bath & Beyond’s fundamentals were crumbling. The company has been in a critical period over the last several quarters; the home goods retailer defaulted on several loans, and management admitted that the company might be forced to file for bankruptcy.
Short sellers had been piling on for several quarters by February of 2023. And yet, in spite of Bed Bath’s financially precarious situation, socially mobilized investing trends saw retail investors smashing the buy button.
Short-term squeezes managed to help Bed, Bath & Beyond put off the bankruptcy by allowing the company to raise over $1 billion through an equity offering. However, once the brief, retailer-caused euphoria was over, the bears took over in a big way. BBBY’s early rally crumbled, and Bed Bath & Beyond shares are currently trading at just fifty cents per share.
The GameStop Short Squeeze
Over the past couple of years, it seems like a GameStop short squeeze has always been “right around the corner.” A preferred target of short sellers, who see the company’s business model as a failing one, GME’s performance has nevertheless remained tied largely to retail investor sentiment and attention, rather than the retailer's underlying fundamentals.
YTD, after some rollercoaster rallies and contractions, GameStop shares are up 30%. The latest catalyst for GME was the company’s fourth-quarter earnings. GameStop reported a profitable quarter for the first time since 2021. The results were firmly in line with the company's management goals.
As of July 28, GameStop's short interest exceeds $1.37 billion, implying about 22% of its float is currently held short. However, unlike AMC and Bed Bath & Beyond, shorting activity has been less intense. Borrow fees currently stand at just 14% (a very elevated level for most stocks, but fairly low for a highly-shorted meme stock such as GME). With that being said, fees did recently hit the 40% mark after GME’s post-earnings rally.
What makes GameStop squeezable is that short sellers have now found themselves with losses of $312 million over the year. At one point immediately after GME’s Q4 earnings release, losses hit $450.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Scorched earf : Lol. Delusional
发财猩猩 : AMC SS was long over. shorts have covered and if not, they were making tonnes of money.
151169387 : Haha that boat has long sailed, all dying stocks now
Dumb Money Space Ape : I’m holding for the squeeze. The shorts haven’t covered. They’re screwed.
FANCY PANTS : TRASH ARTICLE
Mindfield : Once the frivolous lawsuit is dismissed we will MOASS
Chris.Chisolm : Haaa
NewtonOj 151169387 : Can you say shilly
The Value Investor : what squeeze? The stock is at $4. No short sellers are in the red and down significant amounts. Do you even know what a short squeeze is? It's literally over. There can't be a squeeze if the stock soared, and then went down even lower than the starting point, which makes no sense. There is no one who needs to cover. Is confronting your own stupidity so difficult that you would rather hold the stock until you are 80 years old until it finally goes up from a short squeeze? Not only are you missing out on gains, but you're underperforming the market severely.
GrapeApe : I guess massive debt and massive share dilution is bullish for some?