Meme stocks see ongoing battle between short and long
03:39, 1 September 2021
Shares in new meme stocks Support.com and Aterian fell sharply on Tuesday, after stunning rallies in recent sessions, suggesting an ongoing struggle between short-sellers and long shareholders.
Video game retailer GameStop and theatre chain AMC Entertainment Holdings saw unusually high prices and volatility in 2021, as retail investors congregated on forums such as Reddit’s WallStreetBets to discuss highly shorted stocks and to trigger short squeezes by driving up prices.
Last week, customer support solutions provider Support.com surged nearly 200%, digital media-focused acquisitions firm Vinco Ventures jumped over 120% and e-commerce platform Aterian advanced 95% as meme stock exuberance showed no signs of abating anytime soon.
Waiting for the squeeze
Ihor Dusaniwsky, managing director of Predictive Analytics at S3 Partners said long shareholders are “waiting for large scale short squeezes to occur.”
However, on Tuesday, shares in Support.com and Aterian fell 13.8% and about 10%, respectively.
“Listen, what I'm about to say is something you already know. Shorts have not covered, in fact they are shorting more hence today's price action,” said one member named ‘blnhnd’ on a subreddit dedicated to Support.com stock discussions.
“This little stunt to shake you is bleeding them. All you have to do is hold,” the post said.
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High short interest
The newer meme stocks Support.com, Vinco Ventures and Aterian have seen high short interest making them targets as investors look to profit from a short squeeze. A short squeeze occurs when the share price rises higher than expected causing short sellers to cut losses and exit their positions with buy orders.
About 60% of tradable shares in Support.com have been shorted amounting to USD218.9m, while short interest in Vinco Ventures and Aterian stood at over 20%, according to short-selling market research website shortsight.com.
“Two new stocks that meme long shareholders are waiting for are Support.com and Vinco Ventures. Both these stocks have had large recent run-ups in their stock price producing large mark-to-market losses for short sellers, expensive stock borrow fees and high Short Interest % Float,” Dusaniwsky said. “If losses continue to mount, shorts will be squeezed and begin to buy-to-cover.”
$SPRT short interest is $219M
— Ihor Dusaniwsky (@ihors3) August 31, 2021
6.02M shares shorted
60.26 % SI% of Float
37.60 % S3 SI% Float
94.57 % fee
Shares shorted down -253K shs, worth $9M, -4.04 %, over the last week.
Shorts down -$164M in 2021 mark-to-market losses;
including +$32M on today's -17.46 % move. pic.twitter.com/YmvNQ7oo78
GameStop and AMC Entertainment
Dusaniwsky said that original meme stocks GameStop and AMC Entertainment will continue to be “short squeeze candidates.”
GameStop and AMC Entertainment also saw significant moves last week, rising 28.6% and 18.7% respectively.
AMC Entertainment shorts lost 21% in mark-to-market losses over the last seven days, while GameStop shorts lost 25% over the last seven days, Dusaniwsky said.
“The squeeze might not have occurred today but may appear tomorrow so they will stay long another day,” said Dusaniwsky.
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