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For many, Amazon eats into their profits, making it harder to develop new products. And it compels them to buy ads on the site to make sure people see their products.Īll of that leaves the suppliers more dependent on Amazon, by far the nation’s top online retailer, and scrambling to deal with its whims. It pushes them to use the company’s warehouses. Duggan is the author of the book “Beating Wall Street With Common Sense,” which focuses on investing psychology and practical strategies to outperform the stock market.Amazon punishes the businesses if their items are available for even a penny less elsewhere. News & World Report Investing contributor since 2016 and is a staff writer at Benzinga, where he has written more than 7,000 articles. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines. On the date of publication, Wayne Duggan did not have (either directly or indirectly) any positions in the securities mentioned in this article. I continue to recommend investors simply stay away from TSLA stock all together. But I have always said story stocks are too dangerous to go long or short. Musk is an excellent storyteller, and he has legions of followers willing to listen to anything he says.īy almost every objective fundamental valuation metric, TSLA stock is extremely overvalued. When chapters get added to the story, the stock goes higher. It trades higher or lower based on the story that CEO Elon Musk and other Tesla enthusiasts spread about the company’s potential to completely take over the global auto, energy, technology and transportation industries in the long-term. TSLA stock is not a great short squeeze candidate. It’s highly unlikely there will ever be the type of supply shortage in TSLA stock that triggered the AMC and GameStop short squeezes earlier this year. But Tesla is a $620 billion company with a huge float. Yes, short sellers are betting $20.87 billion against Tesla, which is a massive amount of money. It’s no coincidence the stock has dropped back below $165 as well. Since that time, GameStop’s short interest and short percent of float plummeted. That extremely high short interest coupled with the flood of Reddit traders buying the stock is the reason GME stock skyrocketed from under $20 to as high as $483 in just a couple of weeks. 15, GameStop’s short percent of float was an eye-popping 107.7%. Tesla’s short percent of float is currently just 4.1%, which is certainly nothing extraordinary.īack on Jan.
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Any number over 10% is relatively high, but it’s nothing crazy for a company like GameStop that is struggling so badly. GameStop’s short percent of float recently was about 13.3%. So how is it that GME stock experienced the mother of all short squeezes back in January? Meanwhile, TSLA stock is down 4.7% year-to-date. At a share price of $169, that means GameStop’s total short interest was about $1.35 billion. GameStop recently had about 8 million shares held short, according to Ortex. At a share price of about $645, short sellers were betting $20.87 billion against TSLA stock. GameStopĪccording to Ortex Analytics, TSLA stock recently had a total short interest of about 32.36 million shares. It’s a crude estimate of just how explosive a short squeeze could be if all the short sellers are forced to cover all at once. Short percent of float is calculated by taking the total short interest and dividing by the total float. The more short sellers cover, the bigger the losses remaining short sellers endure.Īt some point, the positive feedback loop hits the point of no return and the stock takes off to the moon. And that soaring share price triggers short sellers to cover their positions by buying stock. That dynamic sends a stock’s share price soaring. In a practical sense, it represents the effective supply of shares available to trade freely on the market.Ī short squeeze is triggered in part when there is not enough supply of shares to meet demand. 7 Growth Stocks to Buy to Make Early Retirement a RealityĪ company’s “float” represents the total shares not held by company insiders or institutions.If company insiders and institutions aren’t selling, their shares aren’t available to contribute to the available market supply. In the stock market, the number of shares of stock is the supply side of the equation.
#SQUEEZE ITS FREE#
On a standard day in the market, big institutions and company executives aren’t trading millions of dollars of stock.Įveryone familiar with the basics of a free market knows that price is typically determined by market supply and demand. However, a significant portion of those shares outstanding are typically held by large institutional investors and company insiders. A company’s total number of existing shares are its shares outstanding.