1/9/2024 0 Comments Vw stock squeeze![]() When the market opened the following day, those short sellers raced to exit their positions to minimise their losses, buying more stock and inflating the share price. Short sellers are thought to have lost an estimated €20bn in the debacle. The Porsche Volkswagen short squeeze was only possible because so much Volkswagen stock (approximately 12.5) was on loan to short sellers at the time of the Porsche announcement. When Porsche then warned about this fact over the weekend, short sellers panicked, tried to get out of the stock, and the VW share price more than doubled in a single day, then went even higher the next day. Volkswagen briefly became the worlds most valuable company during the global financial crisis due to a short squeeze. It eventually became clear that the “free float” of VW shares was much smaller than the shorts had realised. However, they reckoned without Porsche, which already owned a big chunk of VW. Put simply, in late 2008, in the depths of the financial crisis, Volkswagen was being heavily targeted by short sellers who thought it would go bust. The share price spiked and several hedge funds got burned.Īn even more extreme example is that of Porsche and Volkswagen, which may well be the biggest short squeeze in history. They also noticed the huge “short interest”, banded together, bought in, and kept buying in. ![]() In 2019, it was on the other side of a short squeeze: it withdrew large amounts of nickel inventories from. However, a group of private investors on social media site Reddit, posting under the group r/wallstreetbets, were feeling more optimistic about GameStop’s potential as a turnaround stock, given the interest of a new activist investor. And Tsingshan has a history of aggressive trading. GameStop had been heavily shorted because selling video games from physical shops is about as outdated as buying music on CDs. This self-perpetuating circle is known as a 'short squeeze'.įamous examples of short squeezes include the frenzy around troubled US video game retailer GameStop in January 2021. This in turn can force the share price to rise even higher, and in a dramatic fashion.
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