GameStop's Short Interest: Everything You Need to Know

The Short Squeeze That Shook Wall Street

GameStop Corp. (GME) has been at the center of a short squeeze that has sent its stock price soaring in recent weeks. Short interest in GME, which measures the number of shares that have been sold short, has been rising steadily in recent months. As of January 27, 2021, short interest in GME stands at approximately 140%, meaning that more than 40% of the company's shares have been sold short. This has led to a sharp increase in the cost to borrow GME shares, making it more difficult for short sellers to cover their positions and has contributed to the stock's recent surge. GME short interest typically falls between 20-30%. Short interest is now at 140%. Short Sellers are now scrambling to cover their positions as to not lose more money. This is causing GME stock to skyrocket.

What is Short Interest?

Short interest is a measure of the number of shares of a company's stock that have been sold short. When an investor sells a stock short, they are betting that the stock price will decline. If the stock price does decline, the investor will profit from the difference between the sale price and the purchase price. However, if the stock price increases, the investor will lose money on the short sale.

What is a Short Squeeze?

A short squeeze occurs when there is a sudden increase in demand for a stock that has a high level of short interest. This can force short sellers to cover their positions by buying back the shares they sold short, which can lead to a sharp increase in the stock price. Short squeezes can be very profitable for investors who are betting on a stock's rise, but they can also be very risky for short sellers who are forced to cover their positions at a loss.

What's Next for GME?

It is difficult to say what will happen to GME's stock price in the future. However, the short squeeze has the potential to continue for some time, as there is still a large amount of short interest in the stock. If short sellers continue to cover their positions, it could lead to a further increase in the stock price. However, it is also possible that the short squeeze will end eventually, and the stock price will decline.

Investors should be aware of the risks associated with investing in GME. The stock price is volatile and could decline rapidly. Investors should only invest in GME if they are prepared to lose money.