GameStop stocks hit restrictions on NYSE after short volume rockets 234%

The New York Stock Exchange (NYSE) has imposed a Short Sale Restriction (SSR) on GameStop after volume spiked to levels reminiscent of GameStop’s famous 2021 short squeeze.

GameStop (GME) short sales volume — the total number of shares sold short within a specific time frame — rose 234% over 24 hours, reaching 30.85 million shares sold on March 27, according to TradingView data. 

The SSR kicks in when a stock drops over 10% from the previous day’s closing price. GameStop’s stock fell 22% over the trading day, wiping out its 12% gain from the Bitcoin announcement and then some, according to Google Finance data.

At the time of publication, GME was trading at $22.09.

The rule is applied for the rest of the trading day and the following trading day. Malone Wealth president and CEO Kevin Malone said in a March 27 X post that “GameStop traded 50x more shares today than last Thursday. Not statistically possible without naked short-selling.”

GameStop’s short sale volume reached 30.88 million on March 27. Source: TradingView

The number is close to the levels reached in January 2021 when GameStop stocks famously went meteoric after a “short squeeze” of the stock, causing significant losses for hedge funds and other short sellers while some retail traders made significant returns.

The highest point reached during that month was 33.26 million shares on Jan. 19.

GameStop did not specify how much Bitcoin it plans to purchase, but after the markets closed on March 26, the firm announced a $1.3 billion convertible notes offering.

However, some analysts and commentators have questioned GameStop’s plan to start purchasing Bitcoin. Speaking to Yahoo Finance on March 27, Tastylive founder and CEO Tom Sosnoff said that GameStop's decision to buy Bitcoin feels “a little dot-comish” to him.

Source: Hans Akamatsu

“It feels a little like, oh, I’m going to throw a dot com at the end of my name, I’m going to buy some Bitcoin with our excess cash because we can’t find a company that is going to be accretive,” Sosnoff said.

Meanwhile, Bret Kenwell, US investment analyst at eToro, told Reuters on March 27 that “investors are not necessarily optimistic on the underlying business.”

The biggest day of short sales still belongs to June 3, 2024, when it reached 46.20 million. 

This was around the time Keith Gill, a stock trader known for the GameStop short squeeze in 2021, revealed on June 2 that he had started trading GameStop stock again, this time with $180 million to play with. 

Related: Firms without business models ‘buy Bitcoin’ — Angel investor Jason Calacanis

GameStop said the convertible senior notes — debt that can later be converted into equity — will be used for general corporate purposes, including acquiring Bitcoin.

Some analysts see the convertible notes offering announcement as the reason for the stock’s decline.

Han Akamatsu said in a March 27 X post that GameStop’s stock is dropping for the same reason Strategy (formerly MicroStrategy) declined after issuing convertible notes.

“In 2021, MSTR issued $1.05B of 0% convertible notes, the stock dipped after the announcement due to hedging shorts, but later exploded when Bitcoin ripped and the arbitrage unspooled,” Akamatsu said, adding:

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.