Camber Energy (CEI) Stock: Is A Short Squeeze Coming?

Camber Energy Inc (NYSEAMERICAN: CEI) is tumbling in the market this morning, following up on the dramatic declines that were seen in the stock yesterday. The declines are the result of a short report by Kerrisdale Capital. 

While the short report has resulted in significant declines in the value of the stock, there’s a big question surrounding opportunity. Keep in mind, CEI has been targeted among the meme stock crowd, a crowd that works together to squeeze short sellers out of their positions. 

So, is a short squeeze coming?

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Kerrisdale Capital Issues Short Report On CEI Stock

In the short report, Kerrisdale Capital made several assertions. The most important of these being that the company could be delisted as soon as next month. However, in Camber Energy’s response, the company made it clear that it’s taking steps to ensure this doesn’t happen by bringing its filings up to date within the allotted time period. 

The report also pointed to the idea that the only real asset owned by CEI is a 73% stake in Viking Energy, a company with several concerns surrounding it. While this is one asset held by the company, it’s not the only asset. 

Finally, Kerrisdale pointed to the heavy dilution that has taken place in CEI over the past several years. There’s no real argument against this. A simple look at the company’s stock chart points to the heavy dilution seen. However, in the response to the report, CEI said that it is committed to improving its capitalization and executing on its growth strategy. 

CEI Responds To Kerrisdale

In a response to Kerrisdale, James Doris, President and CEO at CEI, had the following to offer:

We are not involved in, nor do we comment on, the day-to-day trading of the company’s common stock. I can say, however, that our business relationships are legitimate and that we are firmly committed to improving the organization’s capitalization and executing on our growth strategy. With respect to the Company’s public filings, our objective is for the Company to become current on or before the expiry of the Initial Cure Period as established by the New York Stock Exchange, which is on or about November 19, 2021.

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Is A Short Squeeze On The Horizon?

There are very clear and valid points made by Kerrisdale. One of the biggest being that the company has diluted shareholder value extremely over the past several years. However, there are also statements made that seem to be inaccurate. For example, the company has far more than a stake in Viking to offer to investors. 

Nonetheless, I believe that this sets the stage for a short squeeze. 

The reality is that while there has been dilution, CEI has been working to get on the right track, and retail investors have been all over the stock. Moreover, when big declines like these happen, they’re often an overreaction, which is likely what’s taking place at the moment. 

As the short interest in the stock continues to climb through the fall, it only makes sense that at some point, the bulls will fight back, pushing the shorts out of their positions and enjoying significant gains as a result. Of course, there’s no telling what the future holds, but I’d be willing to bet some serious money that a short squeeze is likely on the horizon. 

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