Short sellers taste bitter $445 million paper loss as Arm Holdings PLC's rocketing share price
1min read Thursday witnessed an unrivaled performance by Arm Holdings PLC"s stocks, that led to short sellers being caught in an unfavorable situation.
As Arm"s stocks zoomed ahead following earnings, short sellers had $445 million likely vaporized, as stated by S3 Partners. The circumstances underlined that shorting shares in semiconductor corporations "did not turn in a beneficial trade" in this calendar year, as per S3"s Ihor Dusaniwsky.
Investors laying bearish conjecture on the segment have seen more than $7 billion vanish in the current market value this year, he pointed out, with about a fifth of that amount disappearing on Thursday.
A large part of Thursday"s paper losses in the chip market were due to Arm's strong performance. However, daily paper losses for those shorting Broadcom Inc., Taiwan Semiconductor Manufacturing Co. Ltd., and Monolithic Power Systems Inc. hovered around $100 million each, as noted by S3.
Dusaniwsky confirmed that currently, Arm's short interest stands at $957 million, with an estimated 12.4 million shares under suspicion and approximately 1.22% of the float implicated. Within the semiconductor industry, Arm placed 14th in short interest positions.
"Investors should anticipate a shift in the short-selling trend that has been noticed in ARM in 2024, as short sellers are pressurized to back out," stated Dusaniwsky, who serves as the managing director of predictive analytics at S3. "As short sellers try to recuperate some of their losses, the need to de-risk is expected to fuel short covering demand during the ongoing rally over the coming days."
Arm, a semiconductor designer, baffled investors with its more than expected results, demonstrating its new profile"s momentum and traction in the artificial intelligence sphere.
"The rise of accelerated computing/AI workload requirements in the data centers, edge systems, and endpoint devices is increasing the demand for higher compute capability and energy efficiency per device, motivating ARM"s customers to adopt their top-performing compute" intellectual property, as per JPMorgan"s Harlan Sur's note to investors.