GameStop Stops

There is a poster on X claiming that $GME short interest is ~700% of shares outstanding. I believe he does some clever reverse engineering to discover how markets are made.

He claims buy volume and short sell volume track together as part of the evidence to start his theory off. This is market making and is true for just about all stocks. I explained operational shorting by market makers/dealers in my Final Stop GameStop post.

As I said then “This mechanism affects all stocks, not just GameStop. Nothing so sinister after all.” The poster is working backwards to rediscover operational shorting again, which is neither directional nor illegal.

The SEC report he cited for his original data also discussed this market maker facilitation / operational shorting.

Also  one may not sum short sale trades across days and then say it is this great multiple of shares outstanding. A single share can be bought and sold short many times over those days. Totaling shares sold short during a day or week is essentially a flow measure that cannot stand alone and ignores the buy side of the transaction. Where the poster claims short interest is over 700%, the poster is more or less calculating the rate of flow of those shares. Maybe the same shares changed hands 7x over the period.

This is the same mistake some investors make interpreting FINRA data on short sales. It is normal and not illegal. 

I recommend reading Final Stop GameStop for a refresher on the facts behind these types of theories.