Sandisk Shorts Face ‘Extreme’ Squeeze Risk With $3 Billion Loss

Short interest in Sandisk Corp. has been climbing for months alongside a sharp rally in the stock, pushing the risk of a short squeeze to an “extreme” level, according to S3 Partners LLC.

“Short sellers have moved in lockstep over the last few months, utilizing a reversal strategy by shorting aggressively into the rally,” the firm’s research team wrote in a note. Since early November, short interest — a metric that shows the proportion of available shares that have been borrowed and sold by bearish traders — has risen to 7.5% of the float from about 4%, while S3’s short-squeeze risk score has climbed to 82.5. Mark-to-market losses on short positions have reached roughly $3 billion, driving the score to what the firm describes as extreme.