BlackBerry (BB) Stock Continues Squeezing The Shorts

BlackBerry Ltd (NYSE: BB) had a tremendously strong day in the market yesterday, gaining more than 30% by the closing bell. The company released news that it would be participating in an upcoming investor conference, but that doesn’t explain such a dramatic run. So, what’s the deal?

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The Short Squeeze Is Real

I’ve talked about AMC quite a bit, pointing to the manipulation by hedge funds and the short squeeze retailers pushed for that handed the funds significant losses. However, hedge fund manipulation isn’t going to focus on a single stock. In fact, there are several stocks that the hedgies have been driving down for personal gain, and BlackBerry is among them. 

Using the same methods including dark pools, heavy short bets, and other manipulative actions, many argue that hedge funds have kept BB stock down for some time, and the retailers are ready to fight back. 

So, when news hit that BlackBerry would be participating in an upcoming investor conference, the stock hit the radar of retailers; and as they looked for similar opportunities to AMC and GameStop, they found excitement in BlackBerry, piling in to send the stock up. 

However, yesterday was likely just the tip of the iceberg, and that can be seen in the premarket activity today. At the moment, the stock is up nearly 14% before the bell and doesn’t appear to be slowing down any time soon. 

How Is This Happening

For the most part, the stock market is a system that values companies based on news through the balance of supply and demand. So, how is it that BlackBerry is seeing such tremendous gains even when the news is less than exciting?

Well, many believe that through short manipulation, hedge funds have driven the stock down, and knowing that the stock market is a system of supply and demand, there’s one clear way to fight back… buy shares!

The reality is that while multi-billion-dollar hedge funds may be able to put their money to work, taking out heavy short positions and unleashing tremendous amounts of supply on the market, retailers can play the game too, and have proven their ability. 

Sure, there aren’t many retailers that have the money to fight a hedge fund one-on-one, but by banding together and targeting the same stock, in this case BlackBerry, retail money is far stronger than institutional money. As a result, when hedgies unload supply, and retailers pick that supply up at a lightning pace, the plan for the hedge funds backfires as the balance between supply and demand tips and demand takes hold. 

When this happens, hedge funds and others who shorted the stock race to cover their positions, only sending the stock further up, and that’s exactly what we’re seeing from BB stock today. 

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The Bottom Line

The bottom line here is simple. We’ve seen moves like this all year as retail investors get tired of big money taking advantage of the system. Now that retail investors are starting to realize that they can gain the upper hand, they will likely continue to do so until the hedgies back off and start playing by the rules that retailers have to follow. Nonetheless, the battle between David and Goliath is likely to continue, creating compelling opportunities like what we’re seeing from BB stock for the foreseeable future. 

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