GoPro (GPRO) Gifted Shares 'Breaks' the Short Squeeze - Cramer

While he's not technically an analyst, Jim Cramer has earned his chops on Wall Street and is currently the go-to name on all things GoPro (NASDAQ: GPRO) - arguably the hottest stock in the market.

Explaining on Twitter why the stock sold off so hard today (-7%) on news founders Nicholas and Jill Woodman gifted 5,821,739 shares to the The Jill + Nicholas Woodman Foundation, which were then released early from the IPO lock-up restriction, Cramer said the news effectively "breaks the short squeeze."

A short squeeze occurs when shorts, or those betting on a stock's decline, are forced to buyback shares. This could happen as a result of margin calls, shorts covering a trade gone bad, or in instances when the stock is called away.

While Cramer didn't mention this specifically, one thought could be that once the shares get into the Foundation's brokerage account the brokerage firm could loan the shares out to short sellers. Given that the stock has been 'hard to borrow' for a short sale, the new shares could give shorts more firepower to force the stock down.

It breaks the short squeeze RT @tgord78: @jimcramer why is GPRO owner donating shares a bad thing? Stock took a huge hit today...

— Jim Cramer (@jimcramer) October 2, 2014

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