GameStop Short Selling Volume Surges by 234%! NYSE Implements “Short Selling Restrictions” to Prevent Recurrence of Short Squeeze

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Short Selling Volume Surges

According to TradingView data, the short selling volume of GameStop (stock code: GME) increased by 234% within 24 hours, reaching 30.88 million shares on March 27. This figure is close to the levels seen in January 2021 when GameStop’s stock surged due to a “short squeeze,” leading to significant losses for hedge funds and other short sellers, while some retail traders reaped substantial gains. The peak that month occurred on January 19, with short selling volume hitting 33.26 million shares.

Short Sale Restrictions (SSR) are typically triggered when a stock’s price falls more than 10% from the previous trading day’s closing price. According to Google Finance data, GameStop’s stock dropped 22% during the trading day, erasing a 12% gain it had achieved following the announcement of its Bitcoin purchase.

This restriction remains in effect until the end of that trading day and the following trading day. Kevin Malone, President and CEO of Malone Wealth, stated in a March 27 tweet on X: “The number of shares traded for GameStop today is 50 times that of last Thursday. It is impossible to say there is no naked short-selling.”

GameStop’s Bitcoin Purchase Criticized as “Dot-Com Bubble”

GameStop did not specify how much Bitcoin it plans to purchase, but the company announced a $1.3 billion convertible bond issuance plan after the market closed on March 26. GameStop stated that the proceeds from these convertible bonds would be used for general corporate purposes, including buying Bitcoin. However, some analysts and commentators have expressed skepticism regarding GameStop’s plan to start purchasing Bitcoin. Tom Sosnoff, founder and CEO of Tastylive, stated in a Yahoo Finance interview on March 27 that GameStop’s decision to buy Bitcoin feels somewhat like the “dot-com bubble.”

“It feels a bit like, oh, I want to add ‘.com’ to the company name, I want to use our idle cash to buy some Bitcoin because we can’t find a company that adds value.”

Some analysts even believe that the announcement of the convertible bond issuance is the main reason for the stock price decline. Han Akamatsu stated in a March 27 post on X that the decline in GameStop’s stock price is linked to the same reasons that caused Strategy (formerly MicroStrategy) to drop after issuing convertible bonds.

“In 2021, MSTR issued $1.05 billion of 0% convertible bonds, and after the announcement, the stock price fell due to hedge short selling, but later surged as Bitcoin skyrocketed and arbitrage trades unwound. GME is now following the same blueprint… If GME or BTC rises significantly, this deal will become very interesting as we have a short squeeze opportunity here.”