shares fell again shortly after the market opened on Tuesday. While some short sellers appeared to hedge their bearish bets in recent weeks, one short selling expert says he still sees a lot of potential for compression.
The shares fell 19% to $ 178.12 around 10:30 a.m. These levels are still higher multiples than the stock’s one-year low of $ 2.57.
Ihor Dusaniwsky, managing director of short selling analytics firm S3 Partners, said Barron on Monday his firm estimated that around 8.98 million GameStop (ticker: GME) shares were recently shorted, about 16% of the shares available for trading.
Dusaniwsky said that over the past month, his firm has seen about 7.5 million covered shorts, meaning bear investors bought stocks to hedge their bets. Most of it occurred during the past week, when 4.6 million shares were hedged.
“GME shorts are undergoing a small contraction, and stocks continue to be one of the top stocks in our short contraction potential metric, meaning that the contraction will likely continue if its share price remains at these levels or more “, additional Dusaniwsky.
Shares in the company soared last week following a company announcement that Chewy co-founder Ryan Cohen has been chairing a board committee with the goal of transforming the retailer into a technology company. Cohen joined the board with two associates in January, kicking off GameStop’s parabolic rise.
GameStop said it will report fiscal fourth quarter results on March 23. Analysts are expecting adjusted earnings of $ 1.35 per share, up from $ 1.27 per share in the previous fiscal fourth quarter, according to FactSet. Of course, analysts are much more bearish on GameStop than the retail investors who post on Reddit’s WallStreetBets forum. The highest price target indicated by FactSet is $ 33, while the average target is $ 14.64.
While the short-term results could cool the GameStop rally, those excited about the stocks are looking to the future. If the company provides upbeat color on its e-commerce efforts and the impact of new game consoles, it could make a quarterly loss more palatable.
Write to Connor Smith at [email protected]