Is Carver Bancorp Stock Due For a Another Short Squeeze?

There are a few obvious questions circulating around Carver Bancorp (NASDAQ:CARV) stock following its recent short squeeze. That short squeeze the CARV stock price skyrocketing from $10 a share on July 7 to end trading at $26.50 on July 9. 

short-squeeze stocks illustration of a person wringing out a business man on a yellow cartoon backdrop with dollar bills falling
Source: Shutterstock

One question is whether there is potential for another such short squeeze to happen. Another question is if there is little chance of that occurring, are there other reasons to be considering CARV stock? There are for investors with particular investment objectives but the thesis here isn’t a clear cut “yes.”

Social media has turbocharged — and changed — investing in a lot of ways. Influencers on platforms including Twitter (NYSE:TWTR), StockTwits and Redditt’s various sub-threads have significant sway over markets, fundamentally changing investing. In short, investing is much more accessible than it was just a few short years ago. 

Will Meade is a former hedge fund manager with a Twitter following that exceeds 200,000 people. He pointed out that CARV stock had massive short interest in late June. The equity had already been of interest but his tweet may have signaled the beginning of the short squeeze as he predicted its 68.2% short interest almost necessitated the action.

Whatever the exact cause is, the short squeeze did occur. However, following its July 9 peak, Carver Bancorp shares have dropped nearly as precipitously as they rose. Between July 9 and July 26 CARV stock share prices have slid from $26.50 to $14.30. 

So, as great as the shares have been to some, there are always those who bought in at the absolute peak. They’re left wondering if the stock can run higher again.

The Next CARV Stock Short Squeeze

Short interest now sits at 16.48%. In normal times that level of short interest would signify the potential for a CARV stock short squeeze. However, short interest tracking website highshortinterest.com gives a significantly different figure for Carver Bancorp.

It puts the amount of short interest at 27.78% currently. It’s difficult to ascertain which figure is more accurate but even if the higher figure is correct, it might not be enough to cause another short squeeze.

That assertion follows the logic that short interest peaked above 68% in order to trigger the July 7-9 squeeze. 

The most recent chatter surrounding the company isn’t the first time the New York bank has garnered headlines. Carver Bancorp has been hot before and prices have surged as a consequence.

Earlier Action on Fundamentals

Lenders like Carver have come into focus over the past year as an estimated $150 million in equity capital has been invested in Black-owned banks since George Floyd was murdered last year, according to the National Bankers Association, a trade group that represents 24 of the country’s minority-owned financial institutions, CNN Business reported last month. That sudden spike in interest sent CARV stock from $2 per share to $12 overnight in mid-June of 2020.

That initial interest tapered off within a week but Carver shares found a new price plateau near $6 at which they traded prior to subsequent price spikes. The CARV stock price then spiked again near the Juneteenth holiday this year. The price surge occurred slightly prior to Carver announcing that it, in conjunction with Bank of America (NYSE:BAC), had closed a Senior Secured Social Impact Revolving Credit Facility with BlackRock (NYSE:BLK). 

At that time share prices for Carver Bancorp reached the $10 plateau. 

More of an ESG Play

Shares of Carver Bancorp have a few potential catalysts at this time. It has garnered more headline space due to its recent short squeeze but it clearly has appeal for ESG investors as well. Playing short interest may simply end in futility.

While that makes it interesting, it should be noted that it is a bank stock. Investors will likely judge CARV stock primarily on its merits as a bank. The company is toeing a precarious line in many ways but if it has appeal for you, there is more than enough justification for an investment at this point.

On the date of publication, Alex Sirois 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.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.


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