Color Star Technology Co Ltd (NASDAQ: CSCW) is screaming for the top in the market this morning, squeezing the shorts out of their positions after announcing non-fungible token, or NFT, news. Here’s what’s going on:
Color Star Technology Announces NFT News
In the press release, Color Star Technology said that it is in the process of developing an NFT business for the production, release, and promotion of NFT through Color China Entertainment, its wholly-owned subsidiary.
The NFTs will surround network copyrights, concerts, artist videos, TV programs, music, museum collections, and celebrity-exclusive product designs.
In the release, the company said it continues its high-tech development to move forward as an entertainment company. Moreover, the company said that it is fully committed to bringing technology, artificial intelligence, and community sharing to the entertainment industry.
Color Star Technology went on to explain that through the application of NFT encryption technology, it hopes to capture more profit appreciation potential for artists and collectors alike.
In a statement, Mr. Luke Lu, CEO at Color Star Technology, had the following to offer:
The Company has always strived to build our entertainment business on the application of new digital technology, and now with the NFT development, we should be able to achieve more breakthroughs in science and technology with respect to our products, services, and partnerships.
With a strong foundation in celebrity entertainment content and creative capability, coupled with the launch of the Color World APP — a celebrity interactive platform created by Color Star, the Company can better enhance and perfect the application scenarios for NFT, and lead the way into a new era of culture and entertainment.
The Gains Could Be Far From Over
While the gains seen in Color Star Technology stock this morning are impressive, they may be far from over. After all, we may be seeing the beginning of a massive short squeeze.
Short squeezes happen when heavily shorted stocks tick up. Those who hold short positions are forced to buy shares to cover their positions and stop the bleeding, leading to dramatic increases in volume and price appreciation.
That seems to be what’s happening this morning.
At the moment, Color Star Technology trades with short interest in the 24% range. That’s incredibly high, suggesting that the gains could be in multiples as shorts exit their positions.
To add icing to the cake, the stock trades with a public float of less than 23 million shares. So, while demand may be high due to the news causing a short squeeze, supplies of shares are low, which will only serve to exacerbate the gains.
The Bottom Line
The bottom line here is simple. NFTs are hot, Chinese stocks are hot, and stocks with heavy short interest and the potential for a short squeeze are hot. Color Star Technology hits every single one of those nails on the head, making the stock one to pay close attention to.