GameStop Hit with Short Sale Restriction After Short Interest Soars 234%

GameStop stock is under a Short Sale Restriction (SSR) following a dramatic surge in short-selling activity, stirring comparisons to the company’s legendary 2021 short squeeze and raising fresh concerns over its shifting business strategy.

GameStop Short-Selling Volume Jumps to Nine-Month High

On March 27, GameStop (GME) short-selling volume surged by 234% in a single day, reaching 30.85 million shares, according to TradingView data — the highest figure in nine months. The spike in short interest has revived memories of the January 2021 short squeeze, when retail investors forced hedge funds to cover their positions at massive losses.

The NYSE’s SSR rule is activated when a stock drops more than 10% from the previous day’s closing price. GameStop’s shares fell 22% on March 27, wiping out a 12% gain from the previous day following news of its Bitcoin acquisition plans. By the end of the trading session, GME was trading at $22.09 — far below its 2021 highs.

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This surge in short-selling volume brought the stock close to the historic peak of 33.26 million shares traded short on Jan. 19, 2021. Under SSR, short sales are restricted for the remainder of the day and the entire next trading session.

Some market watchers believe these conditions could set the stage for another short squeeze. Kevin Malone, CEO of Malone Wealth, raised eyebrows on X, commenting that GameStop traded “50x more shares today than last Thursday,” suggesting the volume was statistically impossible without naked short selling.

GameStop Corp $GME traded 50x more shares today than last Thursday. Not statistically possible without naked short selling. pic.twitter.com/vBIL8IeFc6

— Kevin Malone (@Malone_Wealth) March 27, 2025

Bitcoin Strategy Sparks Investor Skepticism

The sharp rise in short-selling activity coincides with GameStop’s announcement of a $1.3 billion convertible note offering aimed at raising funds for general corporate purposes, including the purchase of Bitcoin. However, the company has not disclosed how much Bitcoin it intends to buy.

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The move has been met with skepticism from financial analysts. Speaking to Yahoo Finance, Tom Sosnoff, CEO of Tastylive, said the announcement felt “a little dot-comish,” comparing it to the early 2000s trend of companies rebranding themselves to appear tech-savvy without solid fundamentals.

Bret Kenwell, a US investment analyst at eToro, echoed similar concerns, telling Reuters that investors remain cautious about GameStop’s core business and that the Bitcoin strategy may be an attempt to generate temporary excitement rather than long-term value.

Parallels to MicroStrategy’s Bitcoin Debt Offering

Some analysts have drawn parallels between GameStop’s latest move and MicroStrategy’s 2021 decision to issue $1.05 billion in convertible notes to finance Bitcoin acquisitions. Following GameStop’s announcement, its stock declined, mirroring MicroStrategy’s initial dip before Bitcoin’s rally later drove its stock higher.

$GME Let me explain to you why GameStop is falling today, as far as I understand based on my $MSTR experience:

1: When MSTR issued convertible notes, institutional buyers used convertible arbitrage:
•They bought the bonds
•Shorted MSTR stock to hedge
•Waited for the bond to… pic.twitter.com/pj7pbIe4Mv

— Han Akamatsu 赤松 (@Han_Akamatsu) March 27, 2025

Market analyst Han Akamatsu noted the similarity in a post on X, writing, “GME is following the same blueprint now… If GME or BTC goes up a lot, the trade gets very interesting as we have a squeeze opportunity here.”

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Another Short Squeeze on the Horizon?

While GameStop’s stock currently faces downward pressure, the combination of soaring short interest, restricted short selling, and corporate moves into Bitcoin has reignited debates over whether the company could experience another unprecedented rally — or face heightened market volatility.