Avino Silver & Gold Mines Ltd (NYSEAMERICAN: ASM) is flying in the market this morning in what is a clear short squeeze. The company hasn’t issued any news via press release or SEC filing, however, there’s good reason for the runs.
Reddit users on the Wall Street Bets page have been chatting about the ticker and seem to be orchestrating a short squeeze, as was the case with GameStop, AMC, and several others. Here’s what’s going on:
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- Avino Silver & Gold Mines Squeezes Shorts
- This Could Go Far Higher
- What Analysts Think About ASM Stock
- Risks to Consider Before Buying ASM Stock
- Final Thoughts
Avino Silver & Gold Mines Squeezes Shorts
As mentioned above, Avino Silver & Gold Mines stock is flying in the market, even though the company hasn’t seen any news. The gains are serious too, well over 100% in the premarket.
So, what’s the deal?
A group of retail investors on the Wall Street Bets Reddit have been targeting various stocks for short squeezes. It’s why we’ve seen dramatic runs in value in GameStop, AMC, BlackBerry, and a range of other stocks.
Today, Wall Street Bets seems to be targeting silver, with the commodity gaining more than 10% so far today. What else would these traders be looking for? A stock that produces silver and experiences heavy levels of short interest.
That’s what ASM stock offers. So, with silver climbing, it only makes sense that members on Wall Street Bets are talking about ASM too. Sending the stock for the top.
This Could Go Far Higher
A short squeeze is a pretty simple process. Short sellers borrow shares and sell them immediately, hoping that the value of the stock will fall and the stock can be purchased and returned at a lower cost later. The difference is the profit.
However, when a stock ticks up, these short sellers race to cover, buying shares back to return them before losses take hold. As a result, we see large volumes of share purchases, driving prices higher.
ASM stock is the perfect target for a short squeeze. First off, the stock is heavily shorted. So, when the stock ticks up, shorts will race to cover, leading to gains. Moreover, there are just over 40 million shares in the company’s public float. That means that supply of shares is relatively low.
An immediate spike in demand on a stock, or any other product with limited supplies, will lead to dramatic price growth. That’s just the law of supply and demand.
All in all, everything is falling in line for a dramatic short squeeze, and like what we saw from GameStop and the other Wall Street Bets targets, the 150% gains we’ve seen so far may just be a drop in the bucket when it comes to what’s ahead.
What Analysts Think About ASM Stock
Analysts have a relatively positive opinion of ASM stock. At the moment, two analysts cover the stock, both of which offer a Buy rating.
While it’s never a good idea to blindly follow the opinions of analysts, their opinions are a great source of validation for your own.
Risks to Consider Before Buying ASM Stock
ASM stock is a stock, meaning it will come with risk as all investments do. When it comes to Avino Silver & Gold Mines, you should consider the following risks before buying in:
- Penny Stock. First and foremost, ASM stock is a penny stock. As a result, it trades with heavy volatility, making entrance and exit decisions more difficult and increasing the risk of fast-paced significant losses.
- Minimal Earnings. Avino Silver & Gold Mines does generate a profit, but not a huge one. In fact, profits have only been about $0.02 per share per quarter over the past four quarters, making it relatively expensive in terms of P/E ratio.
- Short Squeezes Are Dangerous. If you’re not experienced, it’s not a good idea to play a short squeeze. When the squeeze reaches the top, the price will drop dramatically and if you get involved too late, that means significant losses.
All in all, ASM is an exciting trade at the moment. While the company is a slow-growth company, and I wouldn’t necessarily make a long-term investment, the potential for dramatic gains in the short squeeze that’s starting is incredible. All in all, ASM stock is one to watch closely.