The one month chart of Pagaya Technologies (NASDAQ:PGY) stock is looking rather incredible right now. Shares traded around $5 a month or so ago and sunk as low as $2.42 last week. Seeing a number of surges since then, however, Pagaya is now trading at $19 per shares, up about 100% today
As with Pagaya’s previous surges, there appears to be little in the way of news to explain this climb. However, it’s clear that PGY stock has a very low float, meaning price manipulation is more likely near-term. This factor, combined with high short interest, makes PGY stock a prime short squeeze opportunity right now.
Being more than a year removed from meme stock mania, it’s interesting to see so many of these short squeeze plays actually pay out, particularly in this bear market. It has been a brutal year for most stocks and short sellers have been winning most battles. However, it appears companies like Pagaya are the new battleground stocks that retail investors are willing to fight over.
Let’s dive into whether this move in PGY stock can continue.
Is PGY Stock a Buy on Incredible Momentum?
When stocks double in a given day — and then double again (and again) — at some point investors have to ask if the run is viable. After all, every incredible momentum-driven rally eventually runs out of steam. Whether momentum is completely lost, or met with a consolidation period before another leg higher, is the question.
However, the more violently a stock like Pagaya moves into the stratosphere, the higher its risk profile becomes. Momentum tends to work in both directions. And, just like short-covering, profit-taking by speculators can lead to some dramatic near-term declines, particularly when names like PGY stock begin to fall back to earth.
Until this volatility settles down, Pagaya will likely remain a speculative short-term trade. Right now, there doesn’t appear to be any fundamental driver for today’s move. That’s something long-term investors ought to consider.
On the date of publication, Chris MacDonald did not hold (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.