Shares of Troika Media Group (NASDAQ:TRKA) are up by more than 40%, leading investors to speculate that a short squeeze is currently underway. That’s brought the year-to-date (YTD) return for TRKA stock to over 550%. The run up was boosted by Troika announcing that it would withdraw a registration statement that detailed the resale of up to 272.76 million shares on Feb. 17. Since then, TRKA is up by about 240%.
So, is a short squeeze responsible for today’s price action? Let’s take a look at the numbers.
As of Feb. 15, there were a total of 12.89 million shares of TRKA sold short with a total value of $3.08 million. That’s equivalent to a short interest as a percentage of float of 36.3%, which rose by 87.4% compared to the reading on Jan. 31. Generally, a short interest above 10% is considered high, while a short interest above 20% is considered very high. Short interest data as of Feb. 28 or later has not yet been released.
Is a Giant Short Squeeze Underway in TRKA Stock?
With a significantly high short interest, its rational to assume that TRKA is experiencing a short squeeze today. On top of that, there’s also another factor that could be contributing to the squeeze.
Today, the cost-to-borrow (CTB) fee for Troika sits at a high 101.77%. On average, stocks have a CTB fee between 0.3% and 3%, which signifies the yearly rate that short sellers must pay to borrow stock. Troika’s CTB fee ballooned to as high as 144.87% last Friday, and it has since fallen dramatically.
A high CTB fee could influence short sellers to sell out by buying shares of the underlying stock. With a higher fee, short sellers have a lesser chance of emerging profitable because they must pay a higher fee. A higher fee could also signal a scarcity of available short shares or high short seller demand, while a falling fee could signal declining short seller demand.
With TRKA up by so much today, its apparent that short sellers are feeling the heat. Another catalyst that may be helping TRKA is a comment from Genius Group (NASDAQ:GNS) CEO Roger Hamilton. Yesterday, Hamilton complimented Troika’s acquisition of Converge and asked for details on how to contact Troika CEO Sid Toama.
On the date of publication, Eddie Pan 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.