- NYSE has implemented a Short Sale Restriction (SSR) on GameStop after short sales volume surged 234% to 30.85 million shares.
- GameStop’s stock fell 22% following its Bitcoin purchase announcement, triggering the SSR when the decline exceeded 10%.
- Analysts have expressed skepticism about GameStop’s Bitcoin strategy, with some comparing it to dot-com era tactics.
The New York Stock Exchange has imposed a Short Sale Restriction on GameStop after the company’s shares experienced a dramatic 22% decline following its Bitcoin purchase announcement. Short sales volume surged to 30.85 million shares on March 27, approaching levels last seen during the famous 2021 short squeeze that captivated financial markets.
GameStop’s short sales volume spiked 234% within 24 hours, according to TradingView data. This triggered the NYSE’s Short Sale Restriction, a mechanism that activates when a stock drops more than 10% from its previous closing price. The restriction remains in effect for the remainder of the trading day and the following trading day.
The dramatic decline effectively erased the 12% gain GameStop had achieved after announcing its intention to purchase Bitcoin, according to Google Finance data. At publication time, GME was trading at $22.09.
Kevin Malone, president and CEO of Malone Wealth, said on X that "GameStop traded 50x more shares today than last Thursday. Not statistically possible without naked short-selling." The current short sales volume of 30.88 million shares approaches January 2021 levels, when GameStop experienced its historic short squeeze that caused significant losses for hedge funds while generating substantial returns for some retail traders.
The highest short sales volume during the 2021 squeeze reached 33.26 million shares on January 19. However, the all-time record still belongs to June 3, 2024, when short sales hit 46.20 million shares following Keith Gill’s announcement that he had resumed trading GameStop stock with $180 million.
GameStop’s recent market turbulence follows its March 26 announcement of a $1.3 billion convertible notes offering, intended for "general corporate purposes, including acquiring Bitcoin." The company did not specify the exact amount of Bitcoin it plans to purchase.
Financial experts have expressed skepticism about GameStop’s Bitcoin strategy. Tom Sosnoff, founder and CEO of Tastylive, told Yahoo Finance that GameStop’s decision feels "a little dot-comish," adding: "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."
Similarly, Bret Kenwell, US investment analyst at EToro, told Reuters that "investors are not necessarily optimistic on the underlying business."
Some market observers see parallels between GameStop’s situation and previous convertible note offerings in the crypto space. Han Akamatsu said on X that GameStop’s stock is declining for similar reasons that Strategy (formerly MicroStrategy) experienced after issuing convertible notes. Akamatsu noted: "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. GME is following the same blueprint now…If GME or BTC goes up a lot, the trade gets very interesting as we have a squeeze opportunity here."
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