Retail investors in GameStop (GME) have caused hedge funds to short-selling the stocks $19.7 billion in losses in January, reported CNBC. The rally led by Redditors on the subforum Wall Street Bets has driven the stock prices to $347.51.
The short sellers, usually legacy hedge funds, have been making money off betting against GME stocks a few times. However, Redditors who are known to invest because they like the stock have piled on to GME and unexpectedly raised its gains.
The year-to-date loss was a result of the squeeze by retail investors, starting with an $8 billion loss on Friday.
According to CNBC, the rally brought the stocks to over 400% last week and over 1,600% the last month.
GameStop shares started to decline, however, as brokers like Robinhood, which is theorized to be owned by Citadel, also the owner of GME short-seller Melvin Capital, restricted trading on their platforms, resulting in a steep dip down to around 100%.
The rally regained its momentum after Robinhood lifted its restrictions, getting the stocks up to around $350 by the end of the week.
While some claim that the short sellers have been able to cover their shorts, S3 managing director of predictive analytics Ihor Dusainiwsky said, “I keep hearing that most of the GME shorts have covered‘ – totally untrue.”
“In actuality the data shows that total net shares shorted hasn’t moved all that much. While the ‘value shorts’ that were in GME earlier have been squeezed, most of the borrowed shares that were returned on the back of the buy to covers were shorted by new momentum shorts in the name.”
Meanwhile, this short squeeze is seen as an impactful one especially as it has been hailed as another revolt against Wall Street since Occupy Wall Street. Other stocks that Redditors have been eyeing include AMC and BlockBuster.
