The mega short-squeeze on cost firms like Melvin Capital and Citron billions of dollars in losses. Both reportedly closed the short position but the 120% printed short float suggests otherwise.
If other short-sellers took their place, then the long and short bet between individual Reddit stock buyers and bears will continue. So, how will the end-game play out?
Short-sellers may have connections to influence how exchanges work. Also, it may speak to other short-sellers to join the position. Also, Robinhood restricted trades to 50 stocks, to manage its liquidity and its risks. If the securities watchdog finds the claim is untrue, then the trading platform will face a fine later on down the road. Assuming the bears get some rules changes to help them unwind their position, they may stop losing more money.
Redditors who are buying GME stock (NYSE:GME) “because they like the stock” need only hold shares. If they do not sell and are willing to hold it forever, this will limit the stock available for selling. As the price rises, some holders may sell the stock but not enough to hurt the stock price. At some point, the price is high enough that more investors sell.
Eventually, GME stock could fall. If it holds its value and keeps rising, short-sellers will have to end their bet against the company completely. It could be weeks before the stock price falls.