This short squeeze review looks at the stocks that are heavily-shorted for various reasons, leading to a surge in the stock price. The increase in share price can force short sellers to exit their positions and resort to buying back the shares they had borrowed. As the short sellers exit their positions, it puts a lot of buying pressure on the stock, which can force its price up even higher.
The risk of short sellers falling into a short squeeze is high. Although short squeezes can be detrimental to short sellers, a short squeeze can nevertheless be advantageous for regular investors. If an investor can predict a short squeeze before it occurs and buy the stock at its cheap price, when and if a short squeeze does occur, that investor stands to make money.
It is important to follow the market when deciding whether to go short or long on a stock, which can sometimes be a daunting task. To help with the process, here is a short squeeze review of four highly shorted stocks:
Short Squeeze Review: J.C. Penney Company Inc. (NYSE:JCP)
JCP stock has a short float of 36.63%. The retailer has announced that it is considering bankruptcy protection in the wake of the COVID-19 epidemic that has forced it to close all its 850 stores, thus affecting its turnaround plan. Even with revenue drying up following the closure of its department stores, the company has adequate cash to navigate the coming months.
J.C. Penney might be considering bankruptcy protections to enable it to rework its financial situation and save some cash on debt payments. The retailer has yet to arrive at a decision on how it will address its troubled financial position. At the beginning of this year, the company failed to convince creditors to restructure its long-term debt of around $4 billion.
Short Squeeze Review: AMAG Pharmaceuticals Inc. (NASDAQ:AMAG)
AMAG is a specialty drug company that develops and commercializes cancer support, anemia management, and maternal health drugs. AMAG stock has a short float of 35.27%.
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The company recently announced that it posted record Feraheme revenue in 2019, with sales increasing by 24.4% to $167.9 million. Similarly, the company recorded $122.1 million in sales for its Makena auto-injector, which was a 62.1% YoY decrease. The decrease in Makena IM sales was due to the company’s decision to exit the intramuscular market because of increased competition and supply issues. AMAG announced last year that the FDA had analyzed PROLONG trial data on Makena, which is used in reducing preterm birth in women who have previously had preterm delivery.
Short Squeeze Review: GOGO Inc. (NASDAQ:GOGO)
Since the beginning of the year, GOGO stock has been on a downward trend. The company’s stock has a short float of around 57.25%. Recently, GOGO released its Q4 earnings, reporting a narrow loss of $0.28 per share compared to last year’s $0.55 per share. This topped consensus estimates of $0.49 per share.
GOGO’s quarterly report shows a 42.86% earnings surprise, as projections from the previous quarter indicated that it was to post a loss per share of $0.57. Revenue came in at $221.31 million, topping consensus projection by 6.91%. In the last four quarters, the aviation internet provider has surpassed estimates on three occasions.
Short Squeeze Review: Dillard’s Inc. (NYSE:DDS)
DDS stock has a short float of 45.25%. The company recently announced the temporal closure of all six of its stores in Mississippi because of the COVID-19 pandemic. These are among the over 200 stores out of its 285 department stores that are closing. However, the company has indicated that online sales will go on at the stores.
In late February, Dillard’s reported that its similar store sales in Q4 had declined, with retail margin remaining flat. The company missed consensus EPS estimates of $3.01 to post adjusted EPS of $2.75. The bottom line dropped 14.6% from the previous year’s Q4 EPS of $3.22, which was mainly because of the soft top line.
Bottom Line
This short squeeze review shows some of the stocks that are significantly shorted. It is, as always, important for short sellers to be aware of the risk of falling into a short squeeze and for regular investors to remember that nothing is definite in the stock market.
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Featured image: Pixabay
