Express, Inc. (NYSE: EXPR) is screaming for the top in the market this morning, trading on gains of nearly 100% prior to the opening bell. However, if you’re looking for press releases or SEC filings, you’ll be hard pressed to find anything.
Traders seem to be grabbing hold of the stock in hopes of a GameStop-like run in value, and their hopes are becoming a self-fulfilling prophecy. Here’s what’s going on:
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- Traders Find a GameStop-Like Opportunity in Express
- Shorts Are Being Squeezed Out of EXPR
- What Analysts Think About EXPR Stock
- Risks to Consider Before Buying EXPR Stock
- Final Thoughts
Traders Find a GameStop-Like Opportunity in Express
If you’re an investor and you haven’t seen the recent move in GameStop Corp. (NYSE: GME), you’re not looking in the right places. The ticker has been everywhere, and for good reason.
Ultimately, GameStop has climbed dramatically over the past several trading sessions as bullish traders squeeze the shorts out of their positions. However, after the dramatic run, investors believe that the gains are coming to an end, and looking for other opportunities.
That’s where Express comes in.
Like GameStop, EXPR stock has been under serious pressure as a result of the COVID-19 pandemic. The company has been the victim of heavy short selling, and the stock has a very small float when compared to other companies of its size.
Essentially, in the eyes of day traders, GME and EXPR are very similar stocks, meaning that EXPR offers a very similar opportunity.
Shorts Are Being Squeezed Out of EXPR
With the above in mind, traders have jumped on Express with the hopes of squeezing the shorts out of their positions.
The concept is simple.
When short sellers open positions, they’re essentially borrowing shares from bulls. Those shares are sold at the current stock price with the hopes that prices will fall. When prices do fall, the short seller buys shares to return to borrowed accounts, making a profit.
However, when prices start to tick up, short sellers start to lose money. As a result, if prices begin to go too high, we start to see a flood of buys from short sellers in an attempt to abandon their positions and cut the bleeding.
That seems to be the case with EXPR stock this morning. Recent gains have been a scary concept for short sellers. As a result, these short sellers are running for cover, buying EXPR and sending the stock on a high-volume run for the top. All in all, this short squeeze is in play, and the gains seen this morning are likely just the beginning.
What Analysts Think About EXPR Stock
Analysts aren’t big fans of EXPR stock. In fact, at the moment, there are only two analysts covering the stock, both of which rate it a Hold. Price targets among both analysts are $1.50, suggesting that there’s extreme downside risk.
Nonetheless, it’s important to keep in mind that you should never blindly follow the opinions of analysts, or any expert for that matter. Moreover, analyst ratings are generally outdated, not taking into account day-to-day activities.
Risks to Consider Before Buying EXPR Stock
Any investment you make will come with risk. When it comes to an investment in EXPR stock, the following risks should be considered:
- Volatility. EXPR is a penny stock. As a result of being a penny stock, the stock is subject to high levels of volatility. While that’s great news on the upside, there could be a volatile run for the bottom too, which could result in significant losses for investors.
- Money. Express does generate revenue, but does not generate profit. If the company can’t find its way to profitability before its bank account dries up, it could look to raise capital through the sale of newly-issued shares, diluting existing shareholder value and resulting in significant declines.
- Speculation. A bet on EXPR stock is a very speculative one, suggesting that the company will make a complete recovery from the COVID-19 pandemic, or be acquired in the process of trying. There’s no way to tell the future, and should one of these activities not take place, the stock could see significant declines.
At the end of the day, Express stock is running for the top as the result of a short squeeze. As we saw from GameStop, these moves have the potential to generate serious gains over the course of a very short period of time.
In the long run, there’s no telling what’s going to happen with EXPR, but in the short term, there’s a strong possibility that we’ll continue to see compelling gains as active traders squeeze the shorts out of their positions.