Meme Stocks Mania: What Is ‘Naked Shorting’ and Why Is It Trending on Twitter?

Naked shorting is trending on Twitter (NYSE:TWTR) today and it looks like there’s no end in sight to the meme stock mania as users react to the news that kicked this all off.

People wearing masks walking past an AMC theater.

Source: rblfmr/Shutterstock.com

All of the excitement around naked shorting started after CNBC host Melissa Lee mentioned that the practice was taking place with shares of AMC Entertainment (NYSE:AMC) stock. The host said the following while discussing the matter.

“There’s a lot of people, a lot of short sellers out there borrowing stock they didn’t have.”

But what exactly is naked shorting anyway?

Here’s how Investopedia describes it.

“Naked shorting is the illegal practice of short selling shares that have not been affirmatively determined to exist. Ordinarily, traders must borrow a stock or determine that it can be borrowed before they sell it short. So naked shorting refers to short pressure on a stock that may be larger than the tradable shares in the market.”

Since then, there’s been even more discussion about naked shorting on Twitter. Several users are sharing a clip of Charles V Payne on Fox News earlier this year. In it, he discusses how hedge funds have been ruining companies by shorting their shares and the average investor is now fighting back. Many are comparing his speech to what is currently happening with AMC stock.

The recent surge of interest in naked shorting has retail traders sending shares of AMC stock higher today. As of this writing, more than 201 million shares of the stock have changed hands. That’s a leap over its daily average trading volume of 136.8 million shares. It’s also sitting 17.7% higher than its closing price on Friday.

Investors that want to learn more about AMC and why meme stocks are soaring today should keep reading.

We’ve been giving extensive focus to meme stocks today to keep up with all the latest news. That includes what’s happening with Clover Health (NASDAQ:CLOV), MicroVision (NASDAQ:MVIS), and RA Medical (NYSEAMERICAN:RMED). You can check out all of this at the following links!

More Meme Stocks News for Monday

On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2021/06/meme-stocks-mania-what-is-naked-shorting-and-why-is-it-trending-on-twitter/.

©2021 InvestorPlace Media, LLC