Short Sellers Face Losses as Bull Market Punishes Bets Against Stocks

In 2025, short sellers have endured a tumultuous start, with significant losses in US and Canadian markets. Data from S3 Partners indicates that short sellers have collectively lost $73 billion, as stock prices have defied their bearish bets.

"The market rally has been an unfavorable environment for short sellers," said Ihor Dusaniwsky, head of predictive analytics at S3 Partners.

The S&P 500 (^GSPC) has ascended approximately 4% this year, while several companies within the index have witnessed substantial gains, influenced in part by short squeezes. Super Micro Computer (SMCI), the index's top performer, has surged over 110% since the beginning of 2025, leading to losses exceeding $2.2 billion for short sellers.

Short squeezes occur when a significant number of investors have placed bets against a stock that is subsequently on the rise. As a result, these traders are compelled to buy the stock to cover their positions, further driving up the price.

JC Parets, chief markets strategist at All Star Charts, emphasizes the importance of guaranteed future buyers for short sellers. "When shorts are squeezed, these can become forced liquidations," Parets notes.

Numerous companies have experienced forced liquidations this year. According to S3 Partners' "squeeze score" model, a score above 70 indicates a stock's vulnerability to a short squeeze, while a score of 90 denotes extreme susceptibility. Super Micro Computer currently holds a score of 100.

Hims & Hers Health (HIMS), Oklo (OKLO), and BigBear.ai (BBAI) are among other stocks that have witnessed significant gains this year due to short squeezes. All three companies have rallies of 80% or more.

Hims & Hers stock recently gained 22% after the company announced plans to introduce at-home lab testing. Short sellers had lost nearly $2 billion betting against the stock prior to this announcement.

"As more participants join the bull market, overstayed short sellers are facing severe consequences," Parets states. "This is a typical characteristic of healthy bull market conditions."