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As the tussle between retail and institutional investors enters the final leg of the year, short sellers who bet against GameStop Corporation and AMC Entertainment Holdings, Inc are on their way to recovery. The two struggling companies, who were the target of institutional investors that expected their share prices to fall due to unfavorable market perspectives, saw a breath of fresh air for their prospect when the retail camp united on social media platforms to collectively buy their stock. This resulted in massive share price increases that ended up causing some hedge funds betting against the stock to go out of business and others to take heavy losses. Now, as we enter October, fresh data reveals that as the previous month came to an end, the short sellers continued to recover some of their losses.
AMC Short Seller Recovery Results In Year To Date Losses To Drop By $590 Million
The latest data for the short sellers, courtesy of S3 Partners, reveals that starting from the end of the first half of this year, investors short selling GameStop and AMC have continued to reverse their losses. The latest data, which covers the losses made by the institutional camp by midday on October 1st, shows that those who have bet against GameStop have lost $6.21 billion over the course of this year, and those that have bet against AMC have lost $3.49 billion over the same time period.
For comparison, a few days after mid-September, the GameStop short sellers had lost $6.4 billion through the year, and their AMC counterparts had lost $3.49 billion. Taking this into stock reveals that in the two weeks since September 17th, the GameStop camp has recovered $230 million in losses ad the AMC camp has fared much better by recovering $590 million.
Collectively, these gains amount to $820 million, which is a staggering figure for just fourteen days. However, when compared with data from June, the upward momentum for the short sellers becomes starker. In June, the year-to-date losses for the GameStop and AMC short sellers were $7.5 billion and $4.5 billion, respectively. Analyzing the latest data concerning these facts reveals that the former have recovered $1.29 billion and the latter $1.01 billion, with the collective recoveries being $2.30 billion in a little over three months.
However, as is evident, the short sellers still have a long way to go before reversing all of their ill fortunes. Their losses this year by the start of October amount to a staggering $12 billion, making the recoveries over the past three months a little over 19%.
Interestingly, despite the heavy losses sustained this year, the GameStop camp has increased its short interest shares. These are the borrowed shares that have been sold on the market in the hopes of share price depreciation and often come under criticism from the retail camp who alleges that the institutional investors hide their data to disguise the true nature of their bets.
S3's data shows that by the start of October, 9.86 million GameStop shares had been 'sold short,' which is a 28% increase in two weeks. However, it is still below the 10 million short interest shares reported by the same firm in June. Furthermore, while S3 reported the short interest shares at 9.86 million at the start of this month, data from Ortex shows that they currently stand at 9.3 million for the week starting this Monday, in a slight increase over the prior week. The borrowing fee for GameStop reported as 0.5% by S3 on October 1st is also lower than the 1.04% being reported by Ortex.
Since the third week of September, GameStop's share price has dropped by roughly 14%, and AMC's share price has dropped by 17%, which has resulted in the short sellers recovering some of their losses. Both are trading at roughly half of their all-time high prices that they touched earlier this year.
