Today, investors in Canoo (NASDAQ:GOEV) and GOEV stock are seeing impressive gains. Indeed, the rally in speculative hypergrowth stocks appears to be back on. And investors looking to get in on this price action are increasingly jumping into these momentum plays of late.
Indeed, Canoo is a stock that has been without momentum for some time. Since peaking near $25 per share late last year, shares of GOEV stock have declined considerably. In fact, since late-March, shares of GOEV stock have traded below their $10 SPAC IPO price.
Today’s rapid increase of 25% at the time of writing has once again brought SPAC investors back into the green. Shares of GOEV are currently trading hands above $11 per share.
It appears there are a number of factors at play with these speculative pre-revenue EV plays today. Let’s dive into what most investors are looking at with Canoo specifically.
Short Squeeze Hopes Driving GOEV Stock Higher
In addition to the high-profile meme stocks most investors have heard so much about, stocks further down the list of short squeeze potentials are seeing a nice boost today.
Canoo happens to be one of a few stocks surging today. Fellow retail investor favorites Wendy’s (NASDAQ:WEN) and Clover Health (NASDAQ:CLOV) are surging.
Indeed, it appears to be a momentum trader’s market today. Similar to Clover, beaten-up Canoo is finally catching a bid. Perhaps that’s unsurprising, given what we’ve seen unfold in recent days. However, the move for the steady-as-she-goes fast food restaurant chain Wendy’s exemplifies the sentiment in the market today.
Investors have called out unusually high call interest in names like Canoo as a key catalyst for today’s move. Companies with higher-than-average short interest are being targeted as potential short squeeze plays. With that in mind, investors should note that data from Yahoo Finance suggests 27% of the GOEV stock float is being sold short. Fintel pegs the short interest ratio at 16%. Whether or not a squeeze materializes or not seems to be immaterial. Investors are buying into the momentum today, en masse.
Currently, more than four times the average daily volume of shares have already traded hands in the case of GOEV stock. For Wendy’s and Clover, the volume is even more incredible today.
Investors should remember to practice proper portfolio discipline and avoid over-extending or buying such stocks on margin today. These moves are unnatural and are completely detached from these companies’ underlying fundamentals. Accordingly, if and when momentum does turn around, these stocks could look ugly.
On the date of publication, Chris MacDonald 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.
