Amid surging interest in a wide swath of meme stocks today, retail investors are once again seeing traction in trading unpopular names. That said, other companies many may not necessarily associate with the meme trade are also surging. Among the companies in focus is Cassava Sciences (NASDAQ:SAVA). At the time of writing, SAVA stock has soared more than 12%.
Much of this move happens to be on speculation that the company’s high short interest could result in a near-term rally. Late last year, Cassava’s management team warned of a “short and distort” campaign against its company. Thus, it appears this stock has officially made the radar of many traders inside the r/WallStreetBets community and elsewhere.
Other popular meme stocks such as Bed Bath & Beyond (NASDAQ:BBBY), AMC Entertainment (NYSE:AMC), GameStop (NYSE:GME) and Party City (NYSE:PRTY) are all making big moves in today’s session. Thus, with Cassava Sciences seemingly joining this group of stock misfits, let’s dive into what investors may expect moving forward.
Can SAVA Stock Continue to Soar?
Indeed, the biotech sector has been one of the most beaten-down areas of the stock market over the past year. Accordingly, many value-based growth investors may look at this space as attractive, given the marked declines nearly across the board in 2022. Notably, Cassava Sciences has relatively outperformed this year, despite a rather bumpy road for the sector. With today’s move, the company’s one-year decline stands at less than 25%. Given the declines many high-profile growth stocks have seen, that’s actually not all that bad.
That said, like many embattled biotech stocks, Cassava is a company that’s struggling to gain profitability. In this market, profits matter. Investors want to see capital return over return on capital. Thus, Cassava and its meme stock peers may see more downside, should the bear market continue on.
For now, this rally is certainly intriguing to watch, from a trader’s perspective. For those thinking longer term, this may be a stock to stay on the sidelines with for now.
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.