The official start of grilling season, Father’s Day, is behind us. But for investors in outdoor grill company Weber (NYSE:WEBR), things are only heating up. Today, WEBR stock has rocketed more than 10% higher on little news.
Perhaps little news is necessary, when investors consider strong consumer demand for items such as grills. A higher-end producer of a range of outdoor cooking products, Weber is a go-to option for investors to play the consumer discretionary space. This week’s bounce in most stocks has proven the ability of WEBR stock to act as a proxy for the sector.
However, perhaps the most important catalyst driving WEBR stock higher today are short-squeeze hopes from investors. According to renowned investor Will Meade, data provider S3 has pegged WEBR as the stock with the most short interest in this market, at 60%. That’s sky-high in any market, and suggests this stock could be prone to a near-term squeeze, should investors jump aboard.
Let’s dive into the likelihood of this rally continuing, and what the future holds for Weber.
Can WEBR Stock Sustain Today’s Move?
Short-squeeze rallies are certainly fun short-term catalysts to keep an eye on. However, it’s also important to remember why there’s so much short interest with Weber right now.
As a higher-end consumer discretionary stock, higher interest rates ought to cool demand in the medium-term. Grills are something most folks can live without, and “nice-to-haves” are finding less investor demand, as many focus in on consumer staples and other defensive areas of the market.
That said, Weber is a stock that’s been the focus of short sellers for some time. This is a stock that’s remained unloved by investors, for a range of other reasons. This has allowed for various near-term volatile moves in WEBR stock from time to time.
Perhaps this time won’t be different, and we could see WEBR stock soar in the near-term. That may happen. But for now, I think Weber is likely to be a company with high short interest for some time, until rate hikes begin to cool and we come out of the other side of whatever this is.
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.