GameStop, AMC Short Sellers Lose More Than $10 Billion As Year Ends

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Short sellers betting against GameStop Corporation and AMC Entertainment Holdings ended the month of October by rapidly extending their losses, despite making some rapid recoveries earlier. GameStop and AMC were pushed to the limelight earlier this year when retail traders united on the social media platform Reddit and collectively purchased the companies' shares in order to boost prices. This came after institutional investors placed bets against the companies, as they expected the share prices to fall due to weak fundamentals. Now, with the year coming to an end, the damage to the institutional camp appears to be permanent, as they show little signs of recovery.

GameStop and AMC Short Sellers Put The Brakes On Early October's Rapid Loss Recovery

Back in October, data from S3 Partners, LLC revealed that the GameStop and AMC short sellers had started to recover their losses at a rate of $20 million per day. The short sellers, whose losses had stood at $6.21 billion and $3.49 billion for GameStop and AMC, respectively by midday on October 1st, saw them drop to $6.16 billion and $3.44 billion in just five trading days.

AMC Insiders Dump More Than $10 Million Of Stock In Just Two Weeks!

However, this recovery might have only been a briefly lived breath of relief as the latest data shows that the short sellers continued to take heavy losses during October following the recoveries. For instance, by the 26th, those who had bet against GameStop saw their losses extend by $20 million, and those who had bet against AMC saw theirs drop by $70 million, in a mixed bag of performance that still somewhat mirrored the slowed pace of onslaught earlier in the month.

AMC's shares closed at $37.19 by the end of the first week of October and at $36.05 on the 26th, which GameStop's shares closed at $172.68 by the end of the first week and at $177.84 on the 26th. So naturally, during this time, while the GameStop short sellers naturally extended their losses, those who had bet against AMC profited, but only marginally.

Short interest and share price data for the period ending on November 4th reveals that the short sellers did not reduce their positions despite an upward price movement. Image: S3 Partners, LLC

However, while activity in the period between early and late October was somewhat muted, the next seven days saw short sellers of both camps resume taking heavy losses. The GameStop and AMC short-sellers had lost $6.18 billion and $3.37 billion by the end of trading on October 26th and by the end of trading on November 4th, these losses had extended to $6.51 billion and $3.69 billion, respectively.

This indicates that during the seven trading days in between, investors who had bet against both companies had lost $320 million each for $640 million in cumulative losses.

Looking at the figures its clear that the institutional investors are not completely exiting their positions, and do not expect another eye popping share price increase for either GameStop and AMC. Over the past six months, GameStop's shares have appreciated by 35% but are still training at only a fraction of their all time high price reached in January.

Similarly, AMC's shares, which peaked in June, are still below their all time price highs, and while, like GameStop, they too have held above certain price levels, they are yet to surge as they did earlier this year suddenly. This consistency seems to have assuaged some of the short sellers' fears, who are sticking with their bets despite crossing $10 billion in cumulative losses this November.

The author has no position in any of the stocks mentioned. WCCF TECH INC has a disclosure and ethics policy.
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