Two weeks ago, InvestorPlace contributor Chris MacDonald speculated that Fisker (NYSE:FSR) stock could be the year’s next big short squeeze. As he noted, the struggling electric vehicle (EV) producer fits the profile for a short squeeze stock on both fundamental and technical levels.
Since then, FSR stock has been highly volatile but remains in the green for the month. However, new data from market research platform Fintel indicates that a squeeze could be even more likely now as there are no Fisker shares available to short at “a leading prime brokerage.” Additionally, retail investor interest in the stock appears to be rising steadily, further suggesting that a short squeeze is likely.
Does this mean that now is the time to buy FSR stock before an impending squeeze takes it higher? Let’s dive deeper into Fintel’s data and what investors can expect in the near future.
Is FSR Stock the Next Short Squeeze?
After a week of rising steadily, FSR stock is falling today on news of reduced guidance for the year. But the bigger story today may be the likelihood of a Fisker short squeeze. As of yesterday, there are zero shares of FSR available to short according to Fintel, a decline from 90,000 on May 6. Short interest accounts for almost 40% of Fisker’s float with 7.99 days to cover for shorts.
All this suggests that a short squeeze is very likely. MacDonald also notes that, while Fisker’s recent declines may make it a tempting play for big money managers, there may be already be too many closing in. In his words:
“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.”
Fisker has only moved closer to short squeeze territory. Data from ApeWisdom shows that mentions of FSR stock across social media investing forums have also surged 38% in the past 24 hours. Clearly, the r/WallStreetBets crowd knows that FSR stock is a possible short squeeze candidate and are watching closely.
On the date of publication, Samuel O’Brient 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.
