Shares of electric delivery van maker Arrival (NASDAQ:ARVL) are driving to three-month highs in Wednesday’s pre-market trading. ARVL stock was up as much as 19% by 7 a.m. Eastern.
Levels not seen since mid-March are being fueled by the 44% short volume ratio on the shares. That has the masses on Reddit’s r/WallStreetBets highlighting the short squeeze potential in ARVL stock. Any stock with a short volume ratio at or above 20% has the potential of being targeted as a squeeze play.
“606 MM shares outstanding, with the majority of shares subject to lock-up and 52mm shares in the public float,” posted one r/WallStreetBets community member, adding data that showed the borrow rate on the share to be “extremely high,” as the shares were ranked No. 2 on Fintel’s table of companies with the highest short borrow rate.
ETRADE data showed the borrow rate was 120% and showed ARVL stock as “Hard to Borrow.”
Beyond the chatterati, is there any fundamental reason for the shares’ sudden jump?
ARVL Stock’s Compelling Upbeat Drivers
Since coming to the public markets in a SPAC merger on March 25, Arrival has been pretty much a “good news” story. At the time of its debut, it was already one of the most valuable startups in the United Kingdom, having created a platform to produce very low-cost EV trucks.
It has a huge, blossoming partnership with United Parcel Service (NYSE:UPS) that is now doing in-depot testing of Arrival’s vehicle.
On May 4, investors pushed the ARVL share price up on news of a deal with ride-hailing service Uber (NYSE:UBER) to create EVs, with production set to start in the third quarter of 2023. Days later, the company reported its inaugural earnings.
Those fundamental factors led InvestorPlace contributor Larry Ramer to conclude that Arrival is “poised to become a strong player in the commercial EV space.” “With a current market capitalization of $11.5 billion ARVL stock is a true bargain for longer-term investors.”
The shares at that time were trading at $17.34 a piece. ARVL stock closed yesterday at $19.90.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News and as a buyside equity research editor. His Substack newsletter, TLV Strategist, covers the Israel business scene.