Upstart Holdings (NASDAQ:UPST) stock is falling today, but reports indicate it may be headed for a short squeeze. The company operates in the artificial intelligence (AI) and fintech spaces, two areas with plenty of opportunity for growth right now.
However, Upstart has failed to garner much momentum, falling more than 25% over the past two quarters. Short sellers have taken notice of this, possibly due to the potential for a squeeze in UPST stock. Adding to this argument is the fact that UPST recently ranked among the most popular meme stocks on r/WallStreetBets.
How likely is it that Upstart will be the next big short squeeze? Let’s take a closer look at the factors pushing it up.
What’s Happening With UPST Stock
Since markets opened today, UPST stock has been in a race to the bottom. It is currently down more than 10% for the day and shows no signs of even a slight rally. Shares are surged more than 30% this week on multiple positive catalysts, though. While the company reported mixed Q1 earnings, it also announced a new funding package worth roughly $2 billion. However, Barron’s attributes this more to attention from short-sellers than from anything else. As it reports:
“The big move is potentially being reinforced by short-sellers moving to cover their bets against the company, as investors hoping to benefit from a falling share price are forced to buy back shares in order to close their trades.
Upstart was recently noted by Barron’s as being on a list of stocks vulnerable to a possible short squeeze. Shares sold short represented 33% of the company’s openly traded shares, as of late April.”
Data from Fintel further suggests that UPST stock is headed for short-squeeze territory. As of this writing, short interest still accounts for 32% of Upstart’s float and investors have just over three days to cover. Additionally, there are currently no shares available to short. However, as the platform notes, its data only “shows the number of shares of US:UPST available to be shorted at a leading prime brokerage. It is not the total number of shares available to short…”
On the date of publication, Samuel O’Brient 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.
