A case study in a short squeeze would be Pitney Bowes (PBI) after earnings on July 30. Apollo Global Management (APO) agreed to acquire its management-services division for $400 million to allow PBI to create a more focused mail marketing and e-commerce company, and the stock soared 25% in a matter of days.
This despite swinging to another quarterly loss.
Needless to say, the direct-mail game has fallen by the wayside in a digital age, and the competition facing PBI is fierce at a time when its total debt is larger than the entire company’s market cap.
There’s a reason PBI just slashed its dividend in half. While the buyout news might have squeezed out some shorts, don’t think PBI is a good long-term play.