Following a rough public market debut, Kidpik (NASDAQ:PIK) — a fashion specialist that manufactures clothing subscription boxes for kids — finally received a reprieve. Earlier today, the company announced that entertainment giant Disney (NYSE:DIS) will showcase its products regarding a new film for its streaming platform Disney+. Subsequently, PIK stock doubled in value. However, prospective traders should note it remains a speculative idea.
For now, Kidpik revels in the massive vote of confidence. Prior to blasting off, PIK stock languished in sub-dollar territory. Naturally, then, the explosive rally caught the market by surprise. Indeed, the extreme turbulence trigged a circuit breaker, temporarily halting trading activity. According to Best Stocks, the Nasdaq exchange previously halted trading on March 25, 2022.
Based on the accompanying press release, Disney’s film “World’s Best” follows the story of 12-year-old mathematics genius Prem Patel, played by Manny Magnus. Specifically, the driving force of the film centers on Prem discovering his late father’s career as a popular rapper and deciding to follow in his footsteps. Throughout the story, the film underscores the importance of self-expression.
Fundamentally, the message bolsters PIK stock as the underlying enterprise facilitates creativity with its fashion boxes. Also, it spares parents time by allowing them to quickly get their kids out the door. As well, the favorable timing — before the school season starts — may help boost demand.
PIK Stock Offers Interesting But Still Risky Speculation
Still priced at a little over a buck, PIK stock may still attract speculative interest. With a market capitalization of just under $9 million and average volume that hasn’t quite hit 34,000 shares, anything can happen with this trade.
Significantly, chatter on social media suggests a short squeeze may be in play for PIK stock. Looking at data from Fintel, the latest stats don’t provide much substance. Currently, PIK’s short interest sits at only 1.74% of its float. Its short interest ratio is 2.38 days to cover. Both metrics are rather unremarkable.
However, the investment resource also notes that the number of shares available to be shorted at a leading prime brokerage lands at zero. To be 100% clear, this figure “does not include data from other brokers or dark pools. It is a small sample, and it is useful for tracking the rise and fall in demand for shares throughout the day and weeks.”
Nevertheless, it may provide an early signal that PIK stock could become a short-squeeze target. It’s not an absolute statement but rather a possibility.
Still, investors should consider that PIK stock remains an extreme high-risk proposition. Since its first public close, shares have stumbled 85%. Financially, Kidpik suffers from a mediocre revenue trend, consistent net losses and negative free cash flow.
Why It Matters
According to TipRanks, no analyst has covered PIK stock within the past three months. However, seven months ago, EF Hutton’s Edward Reilly pegged shares as a buy with a $7 price target. If PIK reaches this moonshot estimate, it would represent over 500% upside.
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.
