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Fails to deliver in shares of GameStop Corp. surged 1350% in the most recent data released by the SEC.
Shares failing to clear increased from 1,632 to 23,708 in the second half of January, the latest data available. Fails to deliver even climbed as high as 152,000 during the period.
This huge number of shares failing to clear stands in contrast to modest figures at companies far larger than GameStop. Here are the fails to deliver for some of the largest companies in the market at the end of the reporting period:
Alphabet Inc. Class A Shares: 27,991
Amazon.com Inc: 0
Apple Inc: 0
Microsoft Corp.: 0
Tesla Inc: 48,826
Sometimes fails to deliver happen for benign reasons, such as clerical errors. But they can also be a sign of naked short selling.
Naked short selling is the generally illegal practice of selling short shares you never borrowed. The trade can’t clear because the shares never existed in the first place.
Meanwhile, you can sell short as many shares as you want without being constrained by the need to borrow them. This is a powerful way to push down a stock’s price.
I’ve written extensively about huge fails to deliver in shares of AMC Entertainment Holdings, Inc., but this is the first time I checked the numbers for GameStop. It’s interesting to note that both meme stocks have huge numbers of trades that don’t clear.
But I’m willing to bet some short sellers are up to no good. Indeed, numerous short selling firms are currently under federal investigation.
The federal government would be wise to investigate these huge numbers of failed trades as one piece of the puzzle.
What do you think is going on in GameStop shares? Leave a comment at the bottom and let us know!
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