Short Sellers Face Losses as Bull Market Squeezes
In 2025, short sellers have faced significant losses as the stock market rally has exposed their positions to short squeezes. According to data from S3 Partners, short sellers have lost $73 billion in US and Canadian markets this year.
The S&P 500 index has risen about 4% year-to-date, with several companies experiencing substantial gains. Among them, Super Micro Computer (SMCI) has surged over 110%, causing short sellers to lose over $2.2 billion.
Short squeezes occur when there is significant downward betting on a stock. When the stock price rises instead, short sellers are forced to buy to cover their positions, driving prices even higher.
"Short sellers are guaranteed future buyers ... when shorts are getting squeezed, these can become forced liquidations," said JC Parets, chief markets strategist at All Star Charts.
S3 Partners developed a "squeeze score" model to assess the susceptibility of a stock to short squeezes. A score above 70 indicates exposure to a squeeze, while a score of 90 signifies extreme susceptibility. SMCI's squeeze score currently stands at 100.
Other stocks with high squeeze scores include Hims & Hers Health (HIMS, 100), Oklo (OKLO, >70), and BigBear.ai (BBAI, >70). All three have rallied significantly this year.
Short sellers have lost nearly $2 billion betting against HIMS due to its recent announcement of expanding into at-home lab testing.
"This is a classic characteristic of healthy bull market environments," said Parets.