It’s been a tough start to 2025 for traders betting against stocks.
Short sellers, who bet on stock prices to fall, have lost $73 billion between US and Canadian markets to start 2025, according to data from S3 Partners provided to Yahoo Finance.
“The rally in the market was not kind to short sellers,” S3 partners head of predictive analyst Ihor Dusaniwsky told Yahoo Finance.
The S&P 500 (^GSPC) has risen about 4% this year, but many companies within the index have soared higher, some in part because of short squeezes. Super Micro Computer (SMCI), the top performer in the index this year, is now up more than 110% since the start of 2025. Short sellers have lost more than $2.2 billion as the stock has run up.
A short squeeze happens when a significant enough number of investors have bet against a stock to go down. If instead the stock rallies, those traders are forced to buy the stock to cover their position and in turn send shares even higher. A short squeeze was the leading drive of the meme stock mania in 2021 when GameStop shares soared to more than 134% in a single day.
“Here’s the thing about short sellers that I think gets forgotten,” All Star Charts chief markets strategist JC Parets wrote in a note on Monday. “Short sellers are guaranteed future buyers … when shorts are getting squeezed, these can become forced liquidations.”
And the market has seen plenty of those forced liquidations this year. S3 Partners uses a model to characterize how “squeezable” a stock is, with a “squeeze score” reading over 70 indicating a stock is exposed to a short squeeze and a reading of 90 signaling the stock is “extremely susceptible” to a squeeze. Super Micro Computer’s reading currently stands at 100.
While perhaps the most high-profile, Super Micro is far from the only stock that’s seen large jumps due to short squeezes thus far this year. Hims & Hers Health (HIMS) also has a reading of 100 on S3’s squeeze score, while Oklo (OKLO), a popular nuclear AI play, and BigBear.ai (BBAI) are both above 70. All three stocks have rallied 80% or more this year.
On Wednesday, Hims stock added another 22% to its year-to-date total after the health and wellness platform said it plans to introduce at-home lab testing through its platform. Entering Wednesday, short sellers had lost nearly $2 billion betting against Hims & Hers stock.
“As more stocks, more sectors and more countries around the world start to participate in this bull market, any of the short sellers who overstayed their welcome are getting blown up,” Parets wrote. “This is a classic characteristic of healthy bull market environments.”
