Image source: StockSera
The number of “fails to deliver” for AMC Stock has once again risen. With Millions and millions of FTDs reported, there are more red flags being raised with this new data for September.
According to Wikipedia: In finance, a failure to deliver is the inability of a party to deliver a tradable asset or meet a contractual obligation. A typical example is the failure to deliver shares as part of a short transaction.
Things to note with failure to delivers (FTD) *Source Investopedia*
- Failure to deliver (FTD) refers to not being able to meet one’s trading obligations.
- In the case of buyers, it means not having the cash; in the case of sellers, it means not having the goods.
- The reckoning of these obligations occurs at trade settlement.
- Failure to deliver can occur in derivatives contracts or when selling short naked.
In the chart above you can see the failure to deliver report has been trending up and the number of shares failing to deliver are still at an extremely high amount. The retail investors that hold AMC Stock are very concerned about the higher-than-normal fail to deliver numbers when it comes to AMC Stock and thing that there could even possibly be naked short selling going on here.
WHAT IS NAKED SHORT SELLING?
A regular short sale is when an investor sells borrowed shares and has agreed to buy the share back later (hopefully at a lower price) which ultimately would net the investor a profit. A naked short sale on the other hand is when an investor bets against a stock without actually borrowing the existing shares first.
Naked short selling is illegal because of its ability to artificially push down a stock’s price. Essentially short selling creates an environment where investors are not actually borrowing existing shares, but they’re still selling shorts — and as many as they want.