A short squeeze is possible here

Dusseldorf The strong start to January brought significant gains to some of the previous year’s losers on the stock market. This situation can become critical for short sellers who are betting on falling prices. Because the rising courses threaten to eat up the profits they made with the previous fall.

Therefore, if short sellers decide to close their bets and take the remaining profits, it could boost the prices of some stocks even further. In stock market jargon, this is called a “short squeeze”. Because short sellers borrow shares for their bets and sell them immediately. So, to stop betting, they need to buy the stocks. The difference between the sale and repurchase price is the profit or loss.

In a recent analysis, the financial data provider S3 Partners identified four German stocks that could benefit from such buybacks: All four have risen significantly since the beginning of the year, while short sellers are still betting massively on falling prices.

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