In other heavily shorted names that rallied last week, BlackBerry fell 19%, Express slipped 34%, Koss fell 33%, Naked Brand lost 35% and Nokia dropped 7% in mid-morning trading. Genius Brands was down 3%.
Many of the names came off their lows of the session after Robinhood announced that it was easing trading restrictions .
Short selling is a strategy in which investors borrow shares of a stock at a certain price on expectations that the market value will fall below that level when it’s time to pay for the borrowed shares. It’s a strategy often used by hedge funds.
Amid last week’s retail investing frenzy in heavily shorted names, Reddit-fueled traders drove GameStop, AMC Entertainment, Koss and others’ stock up, squeezing hedge funds shorting the names. This week, those stocks are coming back down to Earth as Robinhood and other trading apps continue to limit buying of stocks and options contracts and as the squeeze trade lost momentum .
Square’s Cash App, which picked up some frustrated Robinhood clients last week, just announced it’s clearing broker, Axos, is halting buys of AMC Entertainment and Nokia.
Shares of GameStop were down more than 60% on Tuesday.