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Aterian Investors Are Pushing Back Against Short Sellers

ATER stock - Aterian Investors Are Pushing Back Against Short Sellers

Source: ST.art/Shutterstock

With shares of Aterian (NASDAQ:ATER) up another 4% today, investors and analysts are rightly wondering if the consumer products company’s stock is caught in a short squeeze. ATER stock has now gained about 60% since April 1 on no significant news from the company or analyst community.

This has prompting worries that shares are being targeted in a short squeeze, likely executed by retail traders. Last week, Aterian did announce the addition of Cynthia Williams, who previously worked at Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN), to its board of directors. But beyond that, there has been no significant news from the company since it released its latest earnings on March 8.

While a high-profile board appointment can move a stock higher, it is unusual for a company’s share price to jump nearly 60% on such an announcement. Based in New York City and previously known as Mohawk Group, Aterian acquires and markets consumer products ranging from coffee to wine fridges. The company says it uses a proprietary artificial intelligence marketing platform to drive e-commerce sales.

Currently, there is high short interest in ATER stock, which means investors are betting the shares will fall. Data from Fintel shows Aterian’s short interest as a percentage of its current float is around 30%, which is high. Retail investors, who have been discussing Aterian stock on Reddit’s r/WallStreetBets forum, might be moving to trap the company’s stock in a short squeeze.

This would not be the first time ATER stock has been squeezed. Last April, shares were trading above $30 before falling to $3.12 in August. The stock then jumped to nearly $18 per share last September before crashing again.

Year-to-date, ATER shares are down 15% even after the recent run higher and continue to trade in penny stock territory. Over the past 12 months, Aterian’s shares are down almost 90% following last year’s short squeezes. The stock also took a hit after short seller Culper Research issued a report highly critical of Aterian and its business model, calling it an “overhyped artificial intelligence” play.

The same report criticized Aterian for buying bad brands. The report was titledAterian (ATER): Bought from Felons & Fraudsters, Sold to You.”

What exactly is going on with ATER stock is not clear — but it has the makings of a short squeeze. Investors should remember: If it walks like a duck and talks like a duck, they should probably steer clear of the stock. Shares that quickly run higher tend to fall just as fast.

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Read More:Penny Stocks — How to Profit Without Getting Scammed

On the date of publication, Joel Baglole held a long position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.  

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/ater-stock-investors-are-pushing-back-against-short-sellers/.

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