MSTR Sees $180M in Failed Trades, Triggering Short Squeeze Fears
MicroStrategy (MSTR) has found itself in the spotlight after recording over $180 million in failed trades during March, sparking increasing concerns about a potential short squeeze. The combination of significant trade failures and elevated short interest is raising alarms among investors.
Data from Fintel and SEC filings shows that 609,000 MSTR shares failed to settle in March, a phenomenon known as Failure to Deliver (FTD). This typically occurs when short sellers are unable to repurchase shares they’ve borrowed, potentially indicating a supply shortage in the stock.
The issue reached a peak on March 26, when over 186,000 shares, valued at about $64 million, failed to settle. Other major spikes in FTDs occurred on March 17 and 21, signaling that the pressure on short sellers may be mounting.
At present, 29 million MSTR shares remain short, representing around 12% of the float, with trading volumes suggesting that a significant portion of these short sales is occurring in dark pools, private venues with limited transparency.
Despite these setbacks, MSTR’s stock has gained 35% since the start of March and 8% on April 22, a sign that investors are starting to price in the potential for a significant upward move. If short sellers are unable to cover their positions as the stock rises, a short squeeze could ensue, forcing a wave of buying activity that could drive the stock price even higher.
Though FTDs don’t guarantee a short squeeze, the ongoing pattern of rising prices, high short interest, and increasing failed trades suggests that MSTR could be heading for a pivotal moment.
