Thanks a lot for sharing this! Actually I think this is quite encouraging for longs! As you might be aware, high short interest ist widely used as an contrarian idicator, predicting higher prices:
„In fact, many contrarian investors use short interest as a tool to determine the direction of the market. The rationale is that if everyone is selling, then the stock is already at its low and can only move up. Thus, contrarians feel that a high short-interest ratio (which we will discuss below) is bullish - because eventually there will be significant upward pressure on the stock's price as short sellers cover their short positions. „
The >21 days to cover could trigger a heavy short squeeze:
„ Typically, if the days to cover stretch past eight or more days, covering a short position could prove difficult.“
Another interesting article how stock with heavy short interest have hugely outperformed:
„Short interest also is unique in that it represents an indication of potential buying pressure. The term “short squeeze” is commonly used to describe the phenomenon that often helps stocks continue with a parabolic climb.“
„The Wall Street Journal said that “In the Russell 3000 index, the 100 most heavily shorted stocks are sharply outperforming the average returns of stocks in the index, according to a Journal analysis of data provided by S&P Capital IQ. The shorted stocks are up by an average of 33.8% through Aug. 16, versus 18.3% for all stocks in the index.”
I wonder what happens if these 4 millions shares have to be covered suddenly (maybe because of the announcement tox testing has started). Will the share price double, triple, quadruple... Can't wait to find out!
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