(Bloomberg) — SoftBank Group’s recent rally exposes risks for investors with short positions that have risen to a one-year high.
This is fueling speculation that any forced exit of these positions could drive the stock even higher. Short interest as a percentage of float rose to 2.27% as of Wednesday, the highest level since July 2025, according to data from S3 Partners LLC. The notional short interest value of $3.9 billion is also the most since at least the start of 2015, the data provider said.
Against such bearish bets, the renewed momentum around OpenAI’s new GPT-6 Astra model spurred a 31% gain in shares of the OpenAI investor this month. That generated paper losses of about $1 billion for short sellers this month, bringing mark-to-market losses to roughly $1.2 billion this year, S3 data shows.
“Losses add pressure on managers with short positions, and a further move in price will really ratchet things up,” said Sam Pierson, director of research at S3, adding squeeze risks are at elevated levels.
A potential short squeeze and further gains in SoftBank Group shares could help support the Nikkei 225 at a time when currency volatility and renewed tensions in the Middle East are weighing on investor sentiment. SoftBank has the second-largest weighting in the index, according to the Nikkei website.
That said, SoftBank’s outsized AI investment program and concerns around financing still cloud the outlook for share performance, potentially reducing short sellers’ losses.
Tomoichiro Kubota, chief market analyst at Matsui Securities Co., said that while the recent rally following the Astra model launch may prompt short covering, upcoming details of the public listing of SB Energy will be the key.
“If demand for SB Energy’s IPO turns out to be strong and pricing stays firm, that could trigger short covering,” Kubota said.
–With assistance from Charlotte Yang.
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