Short Sellers Caught Short As Nvidia Shares Rocket

Short sellers in shares of Nvidia Corp were down US$4.1 billion in mark-to-market losses in three trading days, according to financial data firm S3 Partners, as the chipmaker's market capitalisation hit US$1 trillion on Tuesday.

Nvidia's shares were up about 31 percent combined over Thursday, Friday and trading so far on Tuesday, and up about 174 percent year-to-date. The market was closed on Monday for a US holiday.

The chipmaker after the close last Wednesday forecast second-quarter revenue more than 50 percent above Wall Street estimates, and said it is bumping up supply to meet demand for its artificial-intelligence chips.

Nvidia's business grew rapidly during the pandemic as videogaming increased, cloud adoption surged and its chips were used for mining cyrptocurrency.

Ihor Dusaniwsky, S3 managing director, wrote in a note on Tuesday that even with significant short covering in Nvidia, the stock is the fourth most shorted in the US, after Apple , Tesla and Microsoft.

For 2023, Nvidia short sellers are now down nearly US$9 billion in mark-to-market losses, according to Dusaniwsky.

Investors who sell securities "short" borrow shares and then sell them in the hope that the stock will fall so the shares can be bought back at a lower price, allowing the investor to repay the loan and pocket the difference. (Reuters)