This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
With the year coming to an end, the fight between retail and institutional investors that kicked off earlier this year seems to have inflicted permanent damage to the latter. The tussle was thrust into the limelight when in January and in May this year, the share prices of specialty retailer GameStop Corporation and theatrical exhibition business AMC Entertainment Holdings, Inc soared by as much as 1,019% due to the retail camp uniting on social media platforms and purchasing the companies' shares in bulk.
This price increase resulted in losses worth billions of dollars for the institutional investors who had bet against both the companies, in a process referred to as short selling. The investors, who were expecting the share price to drop, reeled back in horror as it soared, causing some even to cease their operations.
Now, fresh data for GameStop and AMC reveals that while the short sellers are rapidly recovering their losses, the rate is insufficient to make a dent into the billions that they have lost over the course of the year.
GameStop & AMC Short Sellers Recover $100 Million In Just Five Days Reveals Data
The latest data, courtesy of S3 Partners, LLC, shows that by the end of trading on October 8th, the year to date losses for GameStop and AMC short sellers stood at $6.16 billion and $3.44 billion, respectively. These figures mark for a rapid rate of recovery since data from the same firm shared earlier this month revealed that by midday October 1st, the GameStop and AMC short sellers had lost $6.21 billion and $3.49 billion, respectively.
Therefore, in the five trading days between the two time periods, the short sellers were able to recover a cool $100 million. This brings up their recoveries since the third week of September to $920 million - or roughly $300 million per week.
While the bulk of this average is due to recoveries made in late October, should this trend continue, then the short sellers stand to recover their losses in 32 weeks or in roughly eight months. Both AMC and GameStop's share prices have been on a downward trend over the past thirty days, with the former having dropped by 11.5% and the latter by 11.2%.
However, when we look at the share prices over the past six months, the case for the short sellers recovering their losses weakens. During this time period, GameStop's share price has appreciated by 18.5% and AMC's price by a whopping 336.7%.
Yet, the recent downward price trends have injected some optimism into the short sellers. As the latest data shows, while the growth trend for AMC's short interest shares has remained relatively static, for GameStop, it has been on the rise since mid September, owing to the share price drops.
The number of these shares, which represent those that have been borrowed by the institutional camp and sold on the market in hopes for the share price to drop, is disputed by the retail camp, which alleges that the institutional investors are hiding the true nature of their positions.
Short interest shares for GameStop have dropped this month after increasing in September, and dark pool data for overall trades reveals that 42% of the trades for GameStop shares were made in dark pools on Friday. Dark pools are private forums that let large investors hide their identities, and for AMC, a staggering 62% of all trades were in the dark pool on the same day.
