GameStop (NYSE:GME) stock is jumping higher by more than 7% today as speculation of a short squeeze continues to mount. Last week, GME stock investors were taken for a spin after ORTEX reported a significant jump in short interest. The financial website later stated that the reading was shown in error and that other stocks experienced similar issues. ORTEX added:
“Clearly, [short interest] did not increase by tens of millions of shares when today’s volume was 2.3 million. That said, we want to get to the bottom of this as well, and will work diligently on behalf of retail investors.”
GameStop currently carries a short interest as a percentage of float of 21.09%. That’s equivalent to 53.88 million shares shorted with a dollar volume of $1.33 billion, significant enough to drive a short squeeze. Days to cover tallies in at 9.9 days. Furthermore, short interest has increased by 5.5% when compared to the end of September.
S3 Partners Fuels GME Stock Short Squeeze
Meanwhile, S3 Partners CEO Bob Sloan believes that the January 2021 GME short squeeze was not a once-in-a-lifetime event and could very well happen again. Sloan notes that short squeezes aren’t just driven by short interest but also by the amount short sellers are losing. Notably, he says that GameStop’s price could become “parabolic” if it breaks above $30 per share.
Sloan contends that a GME short squeeze could happen again due to “Kardashian economics.” The Kardashians have been in the public spotlight for over a decade, showing the same resiliency as GME stock investors. The CEO adds that “socially mobilized investing” isn’t going away anytime soon.
On top of that, GME liquidity seems to be drying up, which could further contribute to a short squeeze. InvestorPlace analyst Tom Yeung explains that at least 71.3 million shares have been registered to GameStop’s transfer agent, up from 50.8 million shares during the previous quarter. In addition, free float is “likely less” than 150 million shares after accounting for closely held shares. This has resulted in the average daily dollar amount of shares traded declining to about $90 million. In 2021, that figure was about $400 million.
On the date of publication, Eddie Pan did not hold (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.
