A surge in failed trades and elevated short interest in MSTR may signal a potential short squeeze, where short sellers are forced to buy back shares to cover their positions, triggering a sharp rise in price.
High failed-to-deliver volume and high short interest suggest pressure is building beneath MSTR. Daily failure to deliver data from Fintel shows multiple spikes in March, with over $63 million in failed trades on ‘March 26 alone’ , highlighting persistent settlement issues tied to short activity.
Short interest refers to the percentage of a company's outstanding shares that have been sold short by investors.
This occurs when an investor borrows shares, sells them at the current market price, and then buys back the same number of shares later to return to the lender.
A high short interest can indicate potential bearish sentiment in the market.
According to data from FINRA, the average short interest for S&P 500 companies is around 3-4%.
However, some industries like financials and technology tend to have higher short interests.
Traders shorting Strategy (MSTR), the bitcoin buyer whose share price gained 13% in March, may be struggling to find enough stock to repay the lenders who underpinned their bets that the company’s value would fall. More than $180 million worth of trades in MSTR stock failed to settle last month, data from the SEC and Fintel show. These events, known as Failures to Deliver (FTDs), happen when a seller doesn’t deliver shares to the buyer by the settlement deadline.
MSTR, short for Master Technologies, is a software company that specializes in data analytics and business intelligence solutions.
Founded in 1986, the company has developed a range of products, including Power BI and SQL Server Reporting Services.
MSTR's technology enables businesses to collect, analyze, and visualize large datasets, providing insights for informed decision-making.
With a strong presence globally, MSTR continues to innovate and expand its offerings in the data analytics market.
Short interest remains elevated in the stock. As of April, around 29 million shares are sold short, more than 12% of all publicly available shares, according to Fintel data. The data also shows that about one-third of MSTR trades on ‘April 22’ were short sales executed off-exchange in private venues like dark pools.
While FTDs don’t necessarily indicate price manipulation or predict a squeeze, their size and frequency in MSTR suggest a potential breakout or breakdown driven by short sellers. The scenario can trigger a short squeeze, a sharp rise in price caused by short covering — short sellers looking to buy to cover their bets.
The recent surge in failed trades and elevated short interest in MSTR may be indicative of a big move in either direction. As the stock price rises, short sellers may be forced to buy back shares to cover their positions, which can trigger a short squeeze.
