KBH Stock: Why Redditors Are Betting on a Big Short Squeeze for KB Home

KB Home (NYSE:KBH) is on the radar of Reddit’s retail investors as the home builder is set to report earnings results later today. KBH stock is down 3.9% over the last three months compared with a 4.7% in sector-tracker SPDR S&P Homebuilders ETF (NYSEARCA:XHB).

KB Home residential development project on Communications Hill in San Jose, South San Francisco Bay Area; KB Home builds homes primarily for first-time home buyers (KBH)

Source: Sundry Photography / Shutterstock.com

Mentions of the KBH ticker on Reddit’s r/WallStreetBets have spiked in the past 24 hours, ahead of the builder’s fiscal second-quarter earnings report, due after today’s close. The consensus earnings per share estimate is $1.31, which would be a near 140% year-over-year increase, with the consensus revenue number at $1.48 billion, or up 62% YOY. Analysts also expect a backlog of $3.88 billion.

What’s also got the social media chatterati’s attention is the short volume ratio in KBH stock, which stands at about 20%. Any stock with a short volume ratio at or above 20% has the potential of being targeted as a squeeze play.

KBH Stock Investors Eye Housing Market Imbalances

KB Homes’ Q2 earnings report comes as the U.S. housing market is plagued by some of the sharpest supply-demand imbalances in recent history. Earlier this month, residential real estate data provider HouseCanary reported that last month, monthly new listing volume was down 0.1% compared to May 2020.

“The inventory deficit that developed in the wake of the COVID-19 pandemic continues to drive single-family home prices higher, leading to record levels of price growth across the United States,” said the data provider’s CEO, Jeremy Sicklick, in a statement.

“While there are positive signs that more sellers have started emerging in the market, we expect current trends to continue into the summer months until the amount of supply coming onto the market outpaces the number of listings going into contract,” HouseCanary reported.

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.


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