After months of gradual decline, WeWork (NYSE:WE) is finally back in the green. The co-working company hasn’t reported any positive catalysts recently. Instead, negative headlines have piled up as the meme stock has veered further toward bankruptcy while watching the New York Stock Exchange delist its warrants. For a former unicorn startup that rocked Silicon Valley and went public with an impressive initial public offering (IPO), WE stock has truly fallen hard. The only thing that has helped it has been meme stock status. This came sharply into focus today as short squeeze momentum pushed shares up to shocking heights.
It’s easy to get caught up in a short squeeze, particularly for retail investors. But data suggests that WeWork’s current surge will not last long. Let’s take a look at the numbers.
A Closer Look at the WE Stock Short Squeeze
It’s true that WeWork has almost doubled in price today. As of this writing, it is up 70% for the day on what appears to be short squeeze momentum. However, data from the short analysis platform Fintel is mixed on the likelihood of an ongoing short squeeze. At the time of writing, there are currently zero shares of WE stock available to short, down from the 4,000 available a few hours ago. But short interest only accounts for 4.5% of the stock’s float. On top of that, the company’s collective short squeeze score is only 70 out of 100. However, it should be noted that Fintel’s data is from only one leading brokerage and does not necessarily reflect the company’s total share count.
All this suggests that the WeWork short squeeze will be over as quickly as it began. Even less risk-averse traders should, therefore, approach it with caution. Once the momentum fades, there will be nothing to keep the struggling meme stock in the green. Yesterday, WE stock plunged as the company announced plans to renegotiate leases. Additionally, the looming threat of a real estate market crash continues to cast doubt over the entire sector. Some companies in the space may be gearing up for a profitable short squeeze, but WeWork is not one of them.
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.
