Thursday marked a momentous day for Arm Holdings (NASDAQ:ARM), as its stock saw an unprecedented rise of 48% in the wake of its much stronger-than-anticipated Q3 results and full-year revenue outlook hike.
According to S3 Partners, this surge led to short sellers incurring $445 million in paper losses. The financial data provider’s analysts pointed out that betting against semiconductor stocks has been unprofitable this year, with short sellers in the sector facing over $7 billion in mark-to-market losses to date.
Remarkably, a significant portion of these losses, about one-fifth, occurred on Thursday alone.
“Shorting the semiconductor sector has not been a profitable trade in 2024 with short sellers down just over $7.00 billion in year-to-date mark-to-market losses, -12.23%,” the analysts said in the report.
“Almost one fifth of those losses were generated today with $1.22 billion in intraday mark-to-market losses hitting profit & loss ledgers,” they added.
Arm's leap contributed a substantial part to the day's overall losses for short sellers in the broader semiconductor industry.
For instance, companies like Broadcom Inc., Taiwan Semiconductor Manufacturing Co. Ltd., and Monolithic Power Systems Inc. also contributed to the short sellers' woes, each registering daily paper losses exceeding $100 million, as reported by S3.
The analysts highlighted that short interest in Arm is currently valued at $957 million, with approximately 12.4 million shares being shorted.
These shorted shares represent about 1.22% of the company's float, positioning Arm as the 14th most shorted stock within the semiconductor sector.