Among the hardest-hit stocks in the market, WeWork (NYSE:WE) continues to flirt with bankruptcy. The popular coworking company, which rents out office real estate to customers on a monthly basis, has seen its business dry up for a myriad of reasons. Accordingly, WE stock has sunk from a split-adjusted $520 per share to just $2.62 per share.
As it turns out, analysts on Wall Street aren’t viewing this stock favorably. Investment bank UBS cut its price target on WE stock to $2.50 per share, while maintaining a neutral rating.
Given that this price cut is just a few cents below where WE stock currently trades, investors looking to get into this company should be concerned. That said, today’s impressive move in WE stock, in which this stock is up more than 18% at the time of writing, suggests perhaps there is some investor interest for this beaten-down and highly shorted name.
Let’s dive into what investors should make of this downgrade and today’s move in WE stock.
WE Stock Surges, Despite Key Price Target Cut
Analyst price targets and ratings aren’t everything for stocks, but they do inform investors and provide some insight into where the so-called smart money believes a given company will go. In this case, UBS’ downgrade is one that certainly makes sense.
The post-pandemic reality we are living in is one that involves hybrid work models for most companies, with remote work much more commonplace than a few years ago. The entire business model that WeWork relies on has been thrown for a loop. And while things may revert back to pre-pandemic normal, it’s unclear if WeWork will be able to manage through the near-term pain, given the debt on its balance sheet.
Of course, those looking for short squeeze opportunities certainly have an intriguing option in WE stock here. According to Fintel, about 8% of its float is being sold short and 0 shares are available to short right now. Thus, this may be another case of retail investors looking to take on hedge funds, given its 18% surge today.
I’m not buying this move, but I do think volatility will be the name of the game moving forward. Thus, it’s buyer beware when it comes to WE stock.
On the date of publication, Chris MacDonald 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.
