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Biggest short squeeze in history5/2/2023 ![]() Many hedge funds assessed the situation and decided to place short positions on GameStop's stock. In January of 2021, due to the market conditions, it seemed like there was little hope for this retail videogame company. It shows that when a group of passionate and committed investors bands together, they can move mountains – or, in this case, the market. The AMC Entertainment Holdings short-squeeze story is one for the ages. (NYSE: AMC) stock had lost at least $1.2 billion. On June 21, data analytics firm Ortex revealed that short-sellers of AMC Entertainment Holdings, Inc. Retail investors rallied against the hedge funds and bought into the stock, raising the price by over 2500%. Similar to GameStop's short-squeeze story, hedge funds bet against the success of this company by placing short positions. AMCĪMC owns and operates movie theaters, and as the world evolved to streaming and due to the coronavirus pandemic, there was little faith in the cinema industry. This is a lesson for investors to be careful when shorting a stock, as the company may be more successful than anticipated. It shows that when a company can perform well despite doubters, its stock price will follow. short-squeeze scenario is one of the biggest and most successful in history. Despite many headwinds, Tesla has continued to excel and its stock price has risen accordingly. ![]() However, short-sellers are yet to see their bets pay off as Tesla continues to perform well. This has caused the company to be one of the most widely shorted against stocks on public exchanges. Tesla is widely regarded as too expensive, with the company valued at more than three times that of the country's two most important automakers. It's estimated that short-sellers have lost over $40 billion by shorting Tesla. It's a great example of how two companies can be intertwined and how short-sellers need to be aware of these relationships when placing their bets. The Volkswagen AG short-squeeze scenario shows that even though a company may be declining, a competitor can acquire and ruin a short position's potential for profits. Hedge funds are believed to have lost about $30 billion on the Volkswagen AG bet. In total Porsche owned 75% of Volkswagen, and since the German state of Lower Saxony owned the remaining 20%, there were less than 6% of the float of shares available.ĭuring the same time, hedge funds and short-sellers had borrowed 13% of the shares to short, which meant they could not cover unless Porsche or the Lower Saxony state decided to sell.Īs a result, the short-sellers were forced to buy back the shares they had sold, driving the stock price from €210 to over €1,000 a share. Porsche which already owned 44% of Volkswagen acquired a large number of shares in Volkswagen, an additional 31% stake. In the middle of the 2008 financial crisis, Volkswagen AG (OTC: VWAGY) and Porsche were involved in perhaps the most well-known short squeeze of all time. Now let's take a closer look at each of these companies and see how high their stock prices went during their short squeezes. (NYSE: AMC)Īs you can see, short-squeezes happen to big and small companies all over the world.
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