SmileDirectClub (NASDAQ:SDC) stock was Reddit’s pick of the day yesterday, and it saw some intense price momentum as a result. Today though, SDC stock is trading downward as investors begin profit-taking. With interest still flooding the stock, where might short squeeze investors be expecting the play to go?
The SmileDirectClub model is a convenient one: Consumers get custom, low-profile dental aligners delivered in the mail in order to straighten their teeth without braces. While innovative, the company has stiff competition within the dental care space, mostly in the form of the much larger competitor Align Technology (NASDAQ:ALGN).
Naturally, institutions have been shorting SDC stock for a while now. According to Fintel, 35% of SDC’s float is currently short. And with retail traders targeting uncovered short positions, it was only a matter of time before the community caught on.
Short squeeze investing influencer Will Meade rallied the meme investing troops yesterday with a tweet. In the tweet, Meade mentioned SDC’s high short interest. The data nudged buyers toward the stock, and volume rocketed fivefold. The stock saw 20% gains as a result of the buyer swarm.
SDC Stock Stalls Out After a Buyer Pump Yesterday
With short interest still high, investors are keeping a watchful eye on the stock. Mentions of SDC stock among popular retail trading subreddits are rising nearly 400% today. But, the stock itself is not rising; in fact, SDC values are largely trading down today.
After a short rise in pre-market, SDC shares are dipping. Currently, the stock is down by just over 3%, but values have fluctuated throughout the morning. Volume is rocketing regardless; over 33 million shares of SDC are exchanging against a daily average of just 6.6 million. One can assume investors are largely taking profits, but with Will Meade and others continuing to push SDC this morning, there is surely a camp that is doubling down with the dip.
As for all the discussion on Reddit around SDC stock, users are torn right down the middle. Some are claiming to be doubling down on the stock. Others are aggravated to have bought any calls in the stock in the first place. As for the rest, we will have to wait and see where the stock goes through the week; it could very well end up being another short squeeze darling.
On the date of publication, Brenden Rearick 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.
