Nvidia Short Sellers Reap Billions as Market Sell-Off Intensifies Data from analytics firm S3 Partners reveals that short sellers of Nvidia Corporation (NVDA) have profited handsomely from the recent three-day market sell-off. Short interest, representing the total value of shares borrowed and sold short, has surged to new heights, with short sellers now holding a position worth approximately $5 billion. The decline in Nvidia’s stock price began on Tuesday, January 24th, following the release of disappointing quarterly earnings. The company reported revenue and earnings that fell short of analyst estimates, spooking investors who had been betting heavily on its continued growth. The sell-off accelerated in the following two days as concerns about slowing demand for Nvidia’s chips intensified. The company has been heavily exposed to the cryptocurrency mining market, which has seen a sharp decline in recent months. Additionally, the broader tech sector has experienced a downturn, with large-cap growth stocks like Nvidia particularly vulnerable. As Nvidia’s stock price plummeted, short sellers who had bet against the company reaped the rewards. Short sellers profit when the stock price of a company they have sold short decreases. According to S3 Partners, the mark-to-market profit for Nvidia short sellers reached $5 billion as of Thursday’s close, marking a significant windfall in a matter of days. The surge in short interest on Nvidia highlights the rising skepticism towards the company’s growth prospects. Investors are increasingly concerned that the cryptocurrency boom that fueled Nvidia’s recent rally is over, and that the company may face challenges in diversifying its revenue streams. The ongoing market sell-off has created opportunities for short sellers across a range of industries. However, the large and concentrated short interest on Nvidia raises questions about whether the decline in the company’s stock price may have become overextended. Only time will tell if the short sellers’ profits will continue to grow or if a market rebound will reverse their recent gains.In the wake of Nvidia’s recent market selloff, short sellers have reaped substantial profits. According to data firm Ortex Technologies, they have made approximately $5 billion in paper profits over the past three trading days.In the wake of Nvidia’s recent market selloff, short sellers have reaped substantial profits. According to data firm Ortex Technologies, they have made approximately $5 billion in paper profits over the past three trading days. Nvidia’s stock has plummeted by 13% since June 18th, eroding $430 billion in market value. Short sellers, who bet on the stock’s decline, have capitalized on this downturn. On Monday alone, they profited $2.4 billion from Nvidia’s 6.6% drop, marking the most significant one-day gain recorded by Ortex since 2019. Some market observers attribute Nvidia’s sell-off to a shift in investor sentiment away from high-flying AI stocks. As 2024 approaches, investors are reportedly rotating their portfolios into other sectors. Despite the recent decline, Nvidia remains a major player in the AI space. Its stock has surged by 145% this year, making it the second-best performer in the S&P 500. This underscores the ongoing optimism surrounding Nvidia’s role in driving the artificial intelligence boom.Short sellers who bet against Nvidia Corp. made $5 billion in the three days following the company’s disappointing quarterly report, data from financial analytics firm Ortex showed. The stock tumbled 26% in those three days, its worst performance since 2008, after the chipmaker gave a downbeat forecast for the current quarter. The short sellers had piled into Nvidia ahead of the report, with over $4 billion of short interest in the stock, according to Ortex. That’s the highest level of short interest in Nvidia since December 2021. The short sellers’ windfall came as the broader market also sold off, with the Nasdaq Composite Index tumbling 4% in the three days following Nvidia’s report. However, Nvidia’s stock has rebounded since then, rising 5% in the past two days. The stock is still down 20% from its all-time high, but it’s outperforming the Nasdaq, which is down 25% from its all-time high. The short sellers’ gains underscore the risks of betting against large-cap tech stocks. These stocks are often heavily shorted, and a positive catalyst can send them soaring. In Nvidia’s case, the company is a leader in the artificial intelligence market, which is expected to grow rapidly in the coming years. The short sellers’ losses also highlight the importance of doing your own research before betting against a stock. Nvidia’s disappointing report was a surprise to many analysts, but it was also a well-known risk. The company had warned that its growth was slowing, and the stock had been underperforming the market for several months. The short sellers who made money betting against Nvidia were likely well-informed and had a strong understanding of the company and the industry. They also had the patience to wait for the right opportunity to short the stock.