Nvidia's (NVDA) market cap briefly surpassed $3 trillion ahead of the company's planned 10-for-1 stock split on Friday after the market close. S3 Partners Managing Director Ihor Dusaniwsky joins Market Domination to discuss how the move will affect short selling.
Dusaniwsky notes that there is a significant short interest in Nvidia, about $2 billion worth over the last 30 days. "This ends up being kind of like a roulette wheel, red or black?" Dusaniwsky says, explaining that investors have to decide whether Nvidia has seen such a run that it's due for a pullback after the split or if it could be the start of a bigger move higher.
Watch the video above to hear what Dusaniwsky says about GameStop (GME) shorts getting squeezed and where else in the market he is seeing short interest.
For more expert insight and the latest market action, click here to watch this full episode of Market Domination.
This post was written by Stephanie Mikulich.
Video Transcript
Nvidia hitting three trillion in market cap for the first time yesterday becoming the second largest US public company behind Microsoft.
Although we are seeing a pull back just a small one today and with Nvidia's 10 to 1 stock play coming up tomorrow, we may see another surge in short selling and options trading for more.
We are bringing in Ihor Duzan managing director at S3 partners.
So let's talk about the uh the short interest that we're seeing here.
The main story.
Uh What's your big picture view?
Well, NVIDIA has got a is, is the largest short in the US market with $34 billion of short interest.
Uh It's climbed to the top over Apple and Tesla.
People are shorting it based on being a momentum stock and also a hedge to the market and a hedge to the tech side of uh of the uh of the street.
So uh we're seeing a lot of activity uh and uh you know, there's something to be said about people shorting ahead of the stock split and, and what does that say?
What does it say that they're shorting ahead of the stock split?
I mean, you know, iii I have seen some research that indicates that say in the 12 months on average following a split, that stocks tend to perform relatively well.
But it obviously if people are shorting it, that would imply they don't believe that in the short term, at least.
Sure.
Over the last 30 days, we've seen around 1.6 million shares short, it's around $2 billion.
So it's not a light figure.
Uh, this includes, you know, option trading because you've got the hedges to the people that are writing options.
You know, they take the hedges out and the short stock in order to protect themselves against their open option positions.
But really, this is, ends up being, you know, kind of like playing a roulette wheel red or black.
We think that the run up in NVIDIA has kind of taken up all the, all the sale, its wins temporarily for the stock split and we're expecting a pullback afterwards or is it just basically the start of a, a bigger move after the stock split?
So, you know, you gotta see who's, who's on each week, uh, each side of the market.
And we're seeing a lot of shorts betting, the, uh, betting, uh, for downturn.
I want to ask you about gamestop here, another ticker that's in the news.
We were talking about roaring kitty Keith Gill.
Uh, finally, uh, uh, talking to the market, talking to the public tomorrow.
What kind of short interest are you seeing in Gamestop ahead of this event?
Well, it's, uh, you know what things just keep coming around in the market.
We've got $2 billion worth of shorts, uh, interest in Gamestop.
It's one of the largest, uh, shorts in the, uh, computer and, uh, and uh retail sector, um, there hasn't been that much short selling recently.
Uh, there's been around uh, uh, 1.3 million shares shorted for the year, around 2 million shares bought to cover over the last 30 days.
There's been a short squeeze in the name.
So we're seeing some pullback in stock.
I mean, you gotta look at the, the the price moves and say that that the shorts are getting wall up today.
I think they're down around $640 million just on today's stock price move that brings your day losses to around 1.4 billion.
So, uh so this has been a painful trade on the short side and we're seeing a lot of shorts get out of the market.
Well, and that, that's what's interesting to me as well.
Igor because I've seen some chatter recently that it's not just shorts that are getting out of the market with something like that, that generally in the market there is lower short interest.
Now, are you seeing that in your data also?
You know, not really.
We're, we're seeing that the short interest has actually gone up over the last 30 days.
Uh overall, we're seeing around $1.15 trillion of short interest, it's up around $25 billion over the past uh you know, 30 days.
And that includes the mark to market interest.
Uh increase of the price of the stocks being shorted already.
But all so it's another $11 billion of short selling.
So there is discriminate short selling in the market, certain sectors are seeing a lot of activity, others, not so much.
Uh You know, we're seeing increased shorting in the uh in the tech sector.
Uh We're seeing short covering in energy.
Uh So, you know, the the people are rotating in and out of sectors.
Uh but generally short interest is still up.
I'm wondering if you have some kind of market timing model that's based on your own analytics and maybe based on uh uh maybe it's a contrary indicator.
But do you aggregate the short positions and then try to divine?
All right, is the market going, is it reaching a peak?
Is it reaching a valley?
Uh anything along those lines?
Yeah, that's uh not something we do to protect, you know, you know, the pricing in the market, what we are we are looking at is what the street is doing.
And you know, when you look at it, you know, a lot of the short selling or most of the short selling is done by the big institutions, hedge funds and such.
So you're kind of looking to say, ok, what's the quote unquote smart money doing in the market?
Um, you'll be looking at stocks that they're looking to short for, you know, profits for an alpha trade.
And you're also looking at shorts that are used as hedges.
So, you know, 12% of the entire short book in the US is, is in mag seven stocks.
So you cut stocks that are looking, uh, shorts that are looking at at those stocks to go down.
And also they're using it as a hedge to the entire portfolio.
But uh right now we're seeing shorts increasing their, their positions.
And finally, there's one more stock I wanted to ask you about Ihor that caught my eye on your list.
And that is micro strategy because most of the other stocks that are on this list are, are mega caps uh micro strategy, not really in that category.
It also stands out because 21% of its uh uh float is shorted, which is a quite a high number and one that again sticks out from the list.
So what have we seen for the numbers there?
Is that a, is that a recent development or has that been pretty consistent?
Yeah.
Well, just kind of to give a perspective.
The average shortage of pension float is 4.8 for the US market.
So we're talking about four or five times the size of the normal average short in the market.
Uh micro strategy is kind of a twofold bet.
You really, it's, it's a Bitcoin bet.
So you want to uh you want a short Bitcoin short micro strategy, it's, it's a much more liquid stock.
You can get in and out of the position as opposed to, you know, going in and out of Bitcoin itself uh or paying a premium in these ETF S. So, you know what a lot of, a lot of shorts are saying?
Yeah, I'm gonna short uh micro strategy instead of uh uh a, you know, a Cryptocurrency bet uh in the market proxy trade, love it.
Um And thanks for all of this uh very elucidating information here, Ivan Ivany.
