Failed Trades Soar to $180M, Raising Stakes for MSTR Short Squeeze

MicroStrategy (MSTR) is under increasing pressure as $180 million in failed trades were recorded in March, fueling speculation that a short squeeze could be imminent. The stock’s sharp volatility, coupled with these trading failures, has analysts on alert.

Data from Fintel and SEC filings revealed that 609,000 MSTR shares didn’t settle properly in March, a situation known as Failure to Deliver (FTD). While FTDs can be caused by a variety of issues, they are also a key sign of tight supply in short-selling, where traders betting against the stock struggle to repurchase shares.

The failed trades spiked on March 26, when over 186,000 shares, valued at $64 million, went unsettled. Additional spikes occurred on March 17 and 21, amplifying concerns that short sellers may be in a vulnerable position.

As of April, MSTR has 29 million shares sold short, representing over 12% of its total float. The company’s trading volume also reveals a substantial amount of activity in dark pools, private trading venues, which makes it harder to track real-time short-selling pressure.

Despite this, MSTR’s price has surged by 35% since early March, with the stock gaining another 8% on April 22 alone. If short sellers are forced to buy back shares to cover their positions, the resulting buying pressure could propel the stock even higher.

While failed trades don’t guarantee a short squeeze, the ongoing pattern of increased FTDs and rising prices suggests that MSTR could soon see a significant market move.