The “Meme stock rally” seems to be back in full swing this month. Names like AMC, GameStop and Bed Bath and Beyond have seen massive swings.
AMC Entertainment’s big rally this month has pushed mark to market losses for AMC short sellers around $653 Million in losses reported by S3 partners data.
Short sellers seem to still be playing with fire, as the AMC short interest is still between 15-20% of the entire float.
Short sellers are risking a lot by shorting stocks like AMC Ent. because of the strong retail community supporting it.
SHORT SQUEEZE UNLIMITED LOSS
When a short squeeze is in fact starting to happen; The stock which is heavily shorted is starting to gain more and more buyers and the short sellers are being forced to buy back their shares as soon as possible, the downside potential for the short sellers is infinite (meaning it could reach any number) until a broker issues margin calls which are likely during this scenario. This is why shorting a stock is so dangerous and why buying a stock which is sold short could be a good opportunity perhaps.