Although the major equity indices appeared to be suffering from the Monday blues, logistics specialist Guardforce AI (NASDAQ:GFAI) suffered no such pensiveness, more than doubling in value. Indeed, the intensity of the upside triggered a trading halt by the Nasdaq exchange operator. Chatter on social media targeted a short squeeze as the main catalyst for GFAI stock. However, speculation toward artificial intelligence-related platforms likely lifted shares.
Originally a cash logistics business, according to its filings with the Securities and Exchange Commission (SEC), Guardforce AI presently bills itself as a secured logistics, AI-driven Robotics as a Service (RaaS) and cybersecurity specialist. Notably, extreme enthusiasm for GFAI stock started on Friday, when it gained just under 46% against the previous day’s close.
Various social media posts — including one by prominent penny-stock trader Timothy Sykes — alluded to a possible short squeeze on GFAI stock. However, the facts reveal a more mundane profile. True, Fintel data notes that the number of GFAI shares available to be shorted at a leading prime brokerage is zero. However, accuracy matters.
Per Fintel, this statistic “…is not the total number of shares available to short, nor is it the short interest.” Further, the investment resource clarifies that “[i]t does not include data from other brokers or dark pools.”
Indeed, Guardforce AI’s short interest only reached 4.74% of the float as of this writing — also, the short-interest ratio pings at a diminutive 0.14 day to cover.
Why Did GFAI Stock Double on Monday?
Based on short interest data from Fintel, it’s unlikely that a short squeeze represents the catalyst for GFAI stock. To be fair, if enough people believe that a short squeeze is materializing, the end result for the bullish speculator will essentially be the same. However, the real casual factor may center on the burgeoning interest in AI-related initiatives.
Since the public debut of ChatGPT, interest in AI as an investment category has blossomed. Notably, InvestorPlace writer William White mentioned that several AI stocks — including GFAI — popped on Monday. Therefore, sentiment appears directed toward the industry rather than a specific trading mechanism.
Moreover, GFAI stock aligns with two compelling industries. First, Grand View Research states that the global secured logistics market reached a valuation of $78.6 billion last year. However, experts at the analysis center project the sector to expand at a compound annual growth rate (CAGR) of 8.9% by 2030. At the culmination of the forecasted period, revenue should hit $153.44 billion.
Second, MarketsandMarkets points out that the global RaaS market should reach a valuation of $1.8 billion in 2023. Here, experts project that the segment should expand at a CAGR of 17.4% to 2028, ultimately reaching a valuation of $4 billion.
Why It Matters
So far, GFAI stock only has one analyst covering it, HF Hutton’s Michael Albanese. The expert rates it a buy with a price target of $30, about 50% higher than the current price.
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 InvestorPlace.com Publishing Guidelines.
