Tupperware (NYSE:TUP) stock is making waves in the market today amidst a potential short-squeeze campaign against the food storage container company. Indeed, rumors are flooding Wall Street that TUP may be the latest “meme stock” in rotations as the company soars more than 500% since the start of July.
What’s behind Tupperware’s surprise surge?
Well, it appears that Tupperware is enjoying the fruits of a speculative frenzy, spurred by a rapid rise in options activity. Investors have been aggressively purchasing both call and put contracts on TUP, in the amounts of 76,000 and 40,000, respectively. Some of the most prominent options contracts purchased included $5 and $7.50 per share bets. With the stock sitting at about $5.50 at the time of writing, it appears some options traders have already cashed out on the stock.
The jump in trading activity comes as a response to Tupperware’s July missive that it expects to have to liquidate some of its assets or radically adjust its operations in order to make interest payments as part of its current credit agreement.
According to financial analytics website Fintel, the cost to borrow TUP has more than doubled just since last week. This is a classic sign of elevated short interest.
TUP Stock Soars on Short Squeeze
With the company’s second-quarter earnings due tomorrow, it seems investors are attempting to manipulate the company’s share price in order to reap potentially lofty windfalls off the backs of short investors, who have essentially hemorrhaged money as the company’s stock continues to rise.
Retail investors are attempting to “squeeze” short investors who bet on the demise of TUP stock. As shares of Tupperware surge in price, short investors are forced to make a choice of either hanging on, incurring theoretically infinite losses, or cutting their losses and backing out of their position, potentially lifting the stock price even further.
Tupperware’s current short squeeze effort is highly reminiscent of other infamous meme stocks like GameStop (NYSE:GME) and Bed Bath & Beyond (OTCMKTS:BBBYQ). Each of whom enjoyed spontaneous, meteoric rises in stock price, even despite clear evidence the companies were headed to bankruptcy.
Mentions of TUP have surged on Reddit’s WallStreetBets alongside its stock price. Short sellers, meanwhile have lost nearly $40 million on paper in the past month, according to S3 Partners. At the time of writing, roughly 30% of available shares are sold short, a notable increase from the 10% level back in November.
Heading into afternoon trading, TUP stock is already up 27% today.
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.
