Is a Giant Short Squeeze Brewing in Express (EXPR) Stock?

  • Retail investors may be targeting fashion retailer Express (EXPR) as a short-squeeze opportunity.
  • A few companies pulled off positive earnings surprises amid an otherwise dour environment.
  • Though highly risky, speculation toward EXPR stock isn’t completely unjustified.
EXPR stock - Is a Giant Short Squeeze Brewing in Express (EXPR) Stock?

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Irrespective of banking sector concerns and the further tightening of monetary policy, meme-stock traders apparently can’t get enough of their speculative activities. This time around, fashion retailer Express (NYSE:EXPR) garnered interest as the next possible short-squeeze opportunity. Ahead of tomorrow’s fourth-quarter 2022 earnings report, EXPR stock popped up about 3%. What’s more, speculation toward Express isn’t wholly unjustified, though it’s an extremely risky trade.

Notably, chatter on social media zeroed in on EXPR stock, which may benefit from a short squeeze, or the deliberate bidding up by bulls to push out bearish traders from their short positions in an effort to spark an upside panic. As the meme-stock phenomenon confirmed during the post-pandemic new normal, short squeezes can generate astounding, even life-changing profitability.

On the other hand, they can also lead to devastating losses, as the implosion of Bed Bath & Beyond (NASDAQ:BBBY) confirmed. Nevertheless, contrarian speculation toward EXPR stock may have modest substance behind it.

According to Fintel, Express’ short interest hit 11.26% of its float. As well, its short-interest ratio comes in at 6.7 days to cover. In addition, the investment resource’s proprietary Short Squeeze Score hit 73.15 out of 100. Per Fintel, “[t]he number ranges from 0 to 100, with higher numbers indicating a higher risk of a short squeeze relative to its peers, and 50 being the average.”

EXPR Stock Adds Both Intrigue and High Risk

Another factor boosting speculative intrigue in EXPR stock centers on its rumblings in the derivatives market. According to Barchart’s screener for unusual stock options volume, EXPR, at the time of writing, saw total volume reach 8,418 contracts against an open interest reading of 58,046.

Further, the delta between the Thursday session volume and the trailing one-month average volume pinged 326.01%. Breaking down the details, call volume reached 7,780 contracts while put volume came in at 638. Therefore, the put/call volume ratio sat at 0.08, which favors the bulls on paper.

Additionally, down-on-their-luck enterprises such as beleaguered plant-based meat provider Beyond Meat (NASDAQ:BYND) posted surprisingly positive earnings results. Therefore, it’s not out of the question for Express to deliver its own pleasant shocker. If so, EXPR stock may skyrocket.

Nevertheless, prospective traders should recognize the extreme risks involved. As CNN Business reported earlier this month, almost all S&P 500 companies reported their earnings. Unfortunately, the news agency stated that the results weren’t great.

To be fair, no one can predict the day-to-day gyrations of the equities market. Therefore, it’s possible that EXPR stock may rise in the near term, especially given the unusual options volume. However, broader headwinds such as the Federal Reserve’s decision to hike interest rates may impact the consumer economy through slowed commercial activity.

Under this framework, whatever pop EXPR stock may generate risks of eventual deflation.

Why It Matters

Although popular meme stocks have made a comeback this year, overall, their longer-term performance remains largely dubious. In addition, the rise in mass layoffs — which are now impacting more than just the technology sector — adds an additional source of concern for discretionary retailers like Express. Ultimately, then, investors must conduct due diligence before engaging EXPR stock.

On the date of publication, Josh Enomoto 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 Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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