GameStop has landed under a trading restriction on the New York Stock Exchange after a major surge in short-selling activity, drawing comparisons to its wild trading days in 2021.
Short Sale Volume Spikes Amid Bitcoin Uncertainty
On March 27, GameStop’s short sale volume skyrocketed by 234%, hitting 30.85 million shares traded in a single day, according to TradingView. This marked the highest short volume for the stock in nine months and triggered the NYSE’s Short Sale Restriction (SSR), which is automatically applied when a stock price falls more than 10% from the previous day’s close.
GameStop shares dropped by 22% that day, erasing recent gains fueled by news of the company’s interest in Bitcoin. At the time of reporting, the stock was trading at $22.09.
The SSR will remain active for the rest of the trading day and the following one. Kevin Malone, CEO of Malone Wealth, claimed in a post on X that the trading volume was so extreme it could only be explained by naked short selling, where shares are shorted without first being borrowed.
Bitcoin Move Draws Skepticism
GameStop has yet to disclose how much Bitcoin it intends to purchase. The announcement came after the firm revealed a $1.3 billion convertible notes offering, which allows debt to be converted into equity.
Not everyone is convinced about the move into crypto. Tom Sosnoff, CEO of Tastylive, said in an interview with Yahoo Finance that the strategy feels like a throwback to the dot-com bubble era. He criticized the move as lacking a solid growth plan, calling it a tactic to boost interest without addressing core business challenges.
Bret Kenwell, an investment analyst at eToro, echoed that sentiment in a statement to Reuters, pointing out that investors remain doubtful about GameStop’s business fundamentals.
Familiar Patterns and Investor Flashbacks
The 30.85 million shares shorted is close to the 33.26 million peak seen during GameStop’s short squeeze frenzy in January 2021. However, the all-time high for short volume came on June 3, 2024, when it reached 46.20 million shares. That spike came after Keith Gill — the retail trader widely credited with igniting the original GameStop rally — disclosed a new $180 million position in the stock.
Analysts say the recent drop in GameStop’s share price may have more to do with the convertible notes announcement than its Bitcoin ambitions. Han Akamatsu noted on X that GameStop’s stock is reacting much like MicroStrategy’s did in 2021 after it issued similar notes. At the time, MicroStrategy shares dipped before rebounding sharply as Bitcoin rallied.
