Express, Inc. (NYSE: EXPR) is flying in the market this morning, and for good reason. The company released its quarterly financial results, and while there was a topline miss, the bottom line came in better than expected. Here’s what’s going on:
Skip to What You Want to Read
- Express Releases Financial Results
- Management Commentary
- A Short Squeeze Could Take Place
- What Analysts Think About EXPR Stock
- Final Thoughts
Express Releases Financial Results
As mentioned above, Express is having a strong start to the trading session this morning after the clothing retailer released its financial results for the fourth quarter. While sales missed the mark, the company’s losses came in with a smaller number than expected. Here’s what we saw:
- Losses. During the quarter, EXPR generated a loss of $53.3 million, working out to $0.82 per share. A year ago, losses came in at $141.6 million, or $2.21 per share. On an adjusted basis, the per-share loss came in at $0.66 per share, beating analyst expectations of a loss of $0.83 per share.
- Top Line. While losses were narrower than expected, the company did miss expectations with regard to sales. During the quarter, sales came in at $430.3 million, down from $606.7 million in the same quarter last year. Moreover, analysts expected that revenue would come in at $490 million.
In a statement, Tim Baxter, CEO at EXPR, had the following to offer:
Over the past twelve months, we have effectively managed our liquidity while meaningfully advancing the EXPRESSway Forward strategy. We took appropriate action and made progress despite extraordinary circumstances and market conditions.
We are well positioned to accelerate in 2021. I expect sales to continue improving sequentially each quarter, and that we will return to positive EBITDA in the back half of the year.
A Short Squeeze Could Take Place
The gains that we’re seeing in EXPR stock early on today are exciting, but they may just be the tip of the iceberg. At the end of the day, the stock makes a perfect short squeeze target.
Don’t forget, just a few weeks ago, the Wall Street Bets Reddit crew jumped on the stock, resulting in dramatic gains. Well, that same type of move has the potential to repeat itself.
At the moment, the short volume ratio on Express stock sits at around 23%. That’s incredibly high, meaning that short sellers are all over the stock.
Of course, when a stock ticks up, those who are short on the stock begin to lose money. If the gains get to be too much, short sellers begin racing to cover, which means they buy shares to return based on the amount they sold short. This leads to extreme gains in both volume and price.
At this point, EXPR stock is running for the top. As such, it would only take a small nudge from the Wall Street Bets crew to make a big short squeeze repeat itself in the stock. Should this happen, the 20%+ gains that we’ve seen so far will be nothing more than a drop in the bucket to the potential gains ahead.
What Analysts Think About EXPR Stock
Analysts aren’t the biggest fans of Express stock. In fact, there are currently two analysts weighing in on the stock, both of which rate it a Hold with a price target of $1.50 per share.
The price target of $1.50 per share suggests that there are potentially significant declines ahead for the stock.
As an investment, there are quite a bit of risks to consider before diving into EXPR stock. However, as a trade, this could prove to be a big winner.
Ultimately, the financial results led to increased awareness, which is what’s causing the stock to tick up. However, a simple nudge from a large group of retail investors could turn these already great gains into significant growth pretty quickly. All told, EXPR stock is one to watch closely.