Joann (NASDAQ:JOAN) stock has enjoyed an unexpected recent rally, lifting suspicions of a potential short squeeze in the making.
Indeed, JOANN is up nearly 45% in the past month, bringing the stock back into compliance with Nasdaq’s $1 minimum bid price at $1.48 per share.
JOAN as the Next Big Short Squeeze Opportunity?
Compared to the meteoric climbs of other meme-darlings like GameStop (NYSE:GME) and Bed Bath and Beyond (OTCMKTS:BBBYQ), which soared more than 160% from trough to peak at the pinnacle of their respective short squeeze campaigns, Joann’s recent jump is undeniably small scale.
It appears some investors are attempting to lift the Ohio-based fabric company as it flirts with a potential delisting. Joan’s recent earnings call in June inspired little confidence in investors but still somehow prompted something of an impromptu rally.
The company missed both revenue and profit estimates by notable margins. Since then, however, investors have actually boosted the struggling stock.
JOAN is currently down nearly 50% year-to-date. This is an improvement from the company’s once 82% stock deficit from June but well below the Nasdaq Composite’s 33% gains this year.
At the time, Joann Chief Financial Officer Scott Sekella claimed the company’s attention is on future cash flow:
“We remain focused on cash generation in fiscal year 2024. In fiscal year 2023, we launched Focus, Simplify and Grow with an eye toward reducing annual costs by approximately $200 million by early fiscal year 2025. We have identified the full amount of our targeted cost savings and will continue to implement these initiatives. With these strategic cost reductions identified and the proactive steps we took to strengthen our balance sheet, we are already seeing a significant increase of $89 million in our free cash flow on a year over year basis.”
JOAN Stock Ticks Up on Insider Activity
Despite Sekella’s optimistic commentary, JOAN has dropped as low as 79 cents a share this year, well below Nasdaq’s $1 minimum price. Fortunately, its tenure below $1 was clearly short-lived.
Joann’s recent stock jump may be the result of some interesting insider trading activity. Indeed, over the last year, insiders have purchased 50,000 shares of JOAN, worth nearly $70,000. That said, over the same period, insiders have sold 7,800 shares worth $66,000, giving a slight edge to the buyers. Most recently, Independent Director Marybeth Hays bought $25,000 worth of JOAN shares.
At the time of writing, JOAN is up over 10% today, on no relevant news.
Whether the company’s recent rise ends up being another short squeeze in the making remains to be seen.
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On the date of publication, Shrey Dua 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.
