Meme stock frenzy leads to $2.5 billion in losses for short sellers
According to a report by Jinse Finance, July has been particularly brutal for traders betting against high-risk U.S. stocks. Data from S3 Partners shows that as of last Thursday, investors had lost $2.5 billion in July on the 50 most heavily shorted publicly traded U.S. stocks. These companies include meme stock representatives such as Kohl’s Corp., and the average loss from shorting these stocks is four times higher than the overall average short-selling loss in the U.S. stock market. As retail investors’ enthusiasm for speculative stocks surges, several heavily shorted stocks have seen sharp rallies, putting significant pressure on short sellers. Although key events this week—such as tariff deadlines, the Federal Reserve’s decision, and non-farm payroll data—pose major tests for risk appetite, strategists generally believe that the current meme stock frenzy still has room to continue. Data from Vanda Research indicates that net retail purchases of meme stocks like Opendoor and Krispy Kreme continue to rise, with trading activity also accelerating.
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