GameStop Short Sellers Spend $80 Million To Finance Their Bets

GameStop

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Short sellers betting against GameStop Corporation spent $80 million to finance their bets during the second quarter of this year suggests the latest data from S3 Partners, LLC. GameStop and retail cinema chain AMC Entertainment came into the limelight last year when retail investors collectively purchased their stock to drive up share prices. This in turn caused losses to the tune of billions of dollars to institutional investors that had bet against the company due to weak fundamentals in the wake of the pandemic and other balance sheet weaknesses.

This year's latest data also shows that year to date, the short sellers which have focused their attention on GameStop have lost $381 million as of the third week of July as the company's share price peaked in March and then earlier this month.

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GameStop Short Sellers Take $381 Million In Losses As Of July 2022

The latest data comes after stats revealed earlier this month showed that investors which had gone against AMC had recovered a little more than $1 billion over the course of this year. While still a hefty amount, this led to the short sellers faring off better than the position at which they had ended 2021, when their losses over the course of the year had stood at $2.87 billion.

GameStop, on the other hand, saw more muted losses for the short sellers. As the first week of this month ended, the losses had stood at $121 million, with the bearish investors losing $235 million on the 7th as GameStop's shares surged by 13%. Cumulatively, the latest data reveals that as the third week of July ended, the short sellers had lost $381 million.

Equally interesting are the borrowing fees for these investors. In the financial world, short selling involves such investors borrowing shares to sell them at high prices in the market. Once the share price drops, the shares are then bought back and returned, with the seller keeping the price difference as a profit.

The share price and short interest data for GameStop Corporation as of July 21, 2022. Image: S3 Partners, LLC

In addition to the short interest data, S3 also shared details about the borrowing fees, which reveal that during the previous quarter, short sellers as a whole had paid $1.97 billion in borrowing fees. This is slightly higher than the $1.67 billion paid during the first quarter of 2022, and more importantly, GameStop saw the highest borrowing fee paid during Q2.

The highest borrow fee percentage was for the drive through coffee company Dutch Bros, which saw its short sellers being charged 66.8% in the fee. In contrast, GameStop made its way into the list of top ten most expensive to short stocks, through a borrow fee percentage of 32.3%. However, owing to the strong short seller interest, the video game retailer saw the largest fee paid, which translated into a hefty $80 million. Second in place was the electric vehicle manufacturer Lucid Group, which saw $61 million in fees paid.

Owing to their coupling as the first meme stocks to hit social media, any mention of GameStop feels incomplete without mentioning AMC as well. Year to date as of the third week of July, the short sellers had made $857 million in profits, which in turn means that over the course of the second and third week, the short sellers have lost more than $150 million. This, in turn, is unsurprising as the company's share price has appreciated by 9.7% over the past month, and it is also up y 1.81% during premarket trading today.

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