Today’s been a very good day for potential short-squeeze stocks. Investors in various short-squeeze plays have done very well today. For investors in Sequential Brands (NASDAQ:SQBG) and SQBG stock, this is certainly the case right now.
Currently, shares of SQBG stock are up nearly 60% at the time of writing. That’s a rather impressive move and indicates that retail investors and traders are very bullish on this name. Indeed, with a relatively low share price and a short-squeeze score of 90.88 (according to Fintel), this makes sense.
However, putting today’s rise in context is important. On Monday, shares of SQBG stock closed around $12 per share. Yesterday, shares plummeted to close the day around $5 per share, down nearly 60%. Accordingly, today’s rise brings SQBG stock to around $8 per share, still more than 30% lower than where shares started the week.
Clearly, there’s a lot going on with this stock. Let’s dive into what’s caused the massive volatility in this micro-cap name.
SQBG Stock Is a Highly Volatile Penny Stock of Late
The key driver behind yesterday’s massive selloff in SQBG stock was a delisting notice the company received yesterday. The Nasdaq informed Sequential Brands that the company was not in compliance with listing rules. This appears to be due to delinquent 10-Q fillings for recent periods in addition to the voluntary Chapter 11 bankruptcy proceedings besetting Sequential Brands. Normally, stocks are given delisting notices as a result of the company’s stock price falling below the $1 threshold. However, these reasons can be markedly worse.
Given the rallies other bankruptcy stocks, such as Hertz (OTCMKTS:HTZZ), have seen, investors seem to be buying the dip. Additionally, it appears relatively high short interest in this stock has spurred the potential for a meme-stock rally. If today’s price action is any indication, perhaps penny stock investors are right with Sequential Brands.
Indeed, time will tell how this embattled stock does from here. However, for now, Sequential Brands remains an intriguing stock to watch from the sidelines.
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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.
