ContextLogic (WISH) Stock Climbs On Retail Backing

ContextLogic Inc (NASDAQ: WISH) is flying in the premarket hours this morning, but if you’re looking for SEC filings or press releases that explain why, you’ll be hard pressed to find anything. The company hasn’t issued any news. 

So, what’s the deal?

Well, it seems as though WISH is making its way around social media, becoming the next big meme stock and setting the stage for a tremendous, retail-driven, run for the top. Here’s what’s going on:

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WISH Stock Is Climbing

As mentioned above, ContextLogic, the company behind the popular online retail outlet, Wish, is screaming for the top in the premarket hours this morning with no news to back the run up. The gains seem to be the result of retail investor buzz surrounding the stock. 

Since the beginning of 2021, we’ve seen significant displays of strength from the retail community as they’ve forced short squeezes in several big names. So, why are they doing this?

Well, the retail community is growing tired of hedge funds that make their money by shorting stocks, which makes sense. In order to short a stock, shares have to be borrowed from investors with long positions and sold onto the market. Large enough short positions ultimately push the value of the stock down, hurting the very investors that the shares were borrowed from. 

With that said, about 17% of the float on WISH stock is being sold short. That’s a huge percentage, which is bad at first, but could become a very good thing for the retail investing community. 

You see, short sellers are banking on the idea that the value of the stock they short will fall, thereby giving them the opportunity to buy it at a lower price than they sold it at, and making a profit on the difference. However, should the stock begin to rise, the short seller starts to lose money. If it rises enough, the short seller starts to feel fear, resulting in them buying shares back to return to the investors they borrowed them from, which is called covering a position. 

When a stock, like WISH, is heavily shorted, if enough short sellers cover their positions, the massive amounts of buying send the stock for tremendous gains, and there’s strong potential that this will be exactly what we see out of WISH. 

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The Bottom Line

The bottom line here is simple. Retail investors are getting tired of market manipulation by big time hedge funds and other institutional investors that ultimately costs the little guy money. So, for the past several months, retailers have been working together to hand the funds losses on these massive positions, ultimately resulting in billions of dollars being shed from hedge fund portfolios. 

As funds continue to manipulate, the retail community is likely to continue to react, creating compelling opportunities, not only in WISH, but in names like AMC, GameStop, BlackBerry, and many more. 

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