Last Year, Short Sellers in US and Canada Stock Markets Lost $190 Billion

Last year, investors who short-sold stocks in the US and Canadian stock markets suffered losses amounting to $194.9 billion. This was because the stock markets surged significantly, contrary to the investors' expectations that stock prices would fall due to recession and high interest rates. Short sellers make money only when the stock prices of the targeted companies decline.

New York Stock Exchange image [Image source=Yonhap News]

According to major foreign media on the 4th (local time), data provider S3 Partners Research revealed that investors who bet on the decline of US and Canadian stocks lost large sums due to the sharp rise in stock prices last year. The total short-selling amount by investors last year was $957 billion.

Short selling is when a stock investor borrows shares of a specific stock expecting its price to fall and sells them. If the stock price falls, the short seller profits; if it rises, they incur losses. Contrary to the expectations of short sellers, the Nasdaq index surged 43.4% last year, and the Standard & Poor's (S&P) 500 index rose 24.2%.

S3 stated that Tesla, Nvidia, Apple, Meta Platforms, Microsoft, and Amazon.com were the six stocks that caused the largest losses to short sellers. These stocks saw significant price increases fueled by the artificial intelligence (AI) boom. S3 commented, "Last year was a very difficult year for short sellers."

During the financial sector crisis in March last year, investors who shorted bank stocks made profits. First Republic Bank, acquired by JPMorgan Chase, saw its stock price plummet, resulting in short sellers earning 840%, approximately $1.6 billion in profits. The bankrupt Silicon Valley Bank (SVB) and Signature Bank also ranked 3rd and 11th in short-selling profitability last year.