Up about 40% over the past five days — including a gain of around 5% today — investors are certainly watching Fisker (NYSE:FSR) stock closely. Indeed, this kind of move in FSR stock hasn’t been seen in some time. Accordingly, there are echoes of 2021 starting to form again in the minds of investors who want to relive that impressive moment in time for the stock market.
An early-stage electric vehicle (EV) company, Fisker is one of the names vying for market share in the growing global EV market. The company’s Ocean SUV has been making headlines as well lately; Fisker expects European deliveries of the Ocean to begin on May 5. This news comes after regulators provided certification for the company’s vehicles, opening up a massive market for Fisker.
Accordingly, there are some clear fundamental drivers behind this move in FSR stock over the past few days. However, some are betting that a short squeeze could be brewing in this company. Let’s dive into why — and whether such a squeeze is already underway.
Is a Short Squeeze in Order for FSR Stock?
Like other EV stocks, Fisker has seen its share price plummet in 2022. A selloff in non-profitable tech companies hit the EV sector hard, with many profitable names also seeing declines. This has made short selling FSR stock a very profitable trade for big money managers.
However, with short interest now surging above 40%, it’s clear that this has become a crowded trade. Fisker isn’t cheap to borrow, meaning short sellers need to time their positions very well. And, given the recent surge in FSR stock (albeit off of low levels), some positions may already be deep in the red. Thus, as more short positions are unwound (effectively resulting in buying pressure), this could lead to an upward spiral for the company’s stock price.
Perhaps that’s part of what has driven the move in FSR stock over the past week or so. Accordingly, we’ll have to see if short interest numbers come down from here, or if the borrow rate improves considerably.
For now, investors certainly have reason to watch Fisker as a potential short squeeze opportunity. Indeed, this is a company with some strong catalysts that could result in more buying pressure. I believe many investors will be watching FSR stock in the weeks to come.
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.
