Koss Corporation (NASDAQ: KOSS) is screaming for the top in the premarket hours this morning, following up on the tremendous gains seen in the stock yesterday. If you’re looking for a press release or SEC filing, you’re going to come up empty.
The gains in the stock seem to be the result of the Reddit crowd getting behind the ticker. Here’s what’s going on:
Skip to What You Want to Read
- Redditors Send Koss Corporation Stock Flying
- This Short Squeeze May Go Far Higher
- Risks to Consider Before Buying KOSS Stock
- Final Thoughts
Redditors Send Koss Corporation Stock Flying
As mentioned above, Koss Corporation is flying in the market this morning, following up on the tremendous gains seen out of the stock yesterday. However, there’s no news that acts as the catalyst for the move. So, what’s the deal?
Wall Street Bets Redditors are showing their strength yet again.
Over the past several weeks, Wall Street Bets has been waging war on hedge funds that short stocks. To do so, the group has been purchasing massive amounts of shares in heavily shorted stocks, resulting in short squeezes.
We saw this type of move with GameStop, Express, and several other tickers.
Now, it seems as though the group is jumping on KOSS stock. Multiple posts on the Wall Street Bets Reddit show that the conversation is heating up, and the group is seeing green.
This Short Squeeze May Go Far Higher
Short squeezes have the potential to yield massive gains. After all, when heavily shorted stocks like KOSS tick up, those who are short on the stock must buy shares to cut the bleeding. This leads to incredible increases in both volume and price.
KOSS makes the perfect target for a massive move like this.
At the moment, the stock trades with a whopping 38%+ short interest. At the same time, the public float on the stock is just 2 million shares. That’s an ultra-tiny float, meaning that there’s not a very big supply of shares.
As the law of supply and demand tells us, when supplies are low, if demand ticks up, prices much rise. With such incredibly low supply of the stock and the Wall Street Bets Redditors pushing for a short squeeze, the tremendous gains that we’ve seen thus far may be nothing more than the tip of the iceberg.
Risks to Consider Before Buying KOSS Stock
If you’re thinking about buying shares in KOSS stock, you’re going to have to be willing to accept risk. After all, there’s no such thing as a risk-free investment. When it comes to KOSS, the most significant risks to consider include:
- Pennies. KOSS is a penny stock. As a penny stock, it sees quite a bit of volatility, making entrance and exit decisions difficult and increasing the risk of significant losses over a short period of time.
- Profitability. Koss Corporation is far from a profitable company. So, the company must survive with the money it has in the bank. If that’s not enough to get the company through to profitability, we could see a fund raise, leading to the dilution of existing shareholder value and significant declines.
- Speculation. KOSS is operating a business model that hasn’t quite been proven. As a result, the stock is a highly speculative bet, which only adds to the risk.
Sure, there are risks here, and from a long-term standpoint, I’m not sure I’d want to invest in the stock for the long run, but the short squeeze potential here is incredible. We’re talking about a stock with a short interest of over 30% and a public float of just 2 million shares. The short term opportunity on KOSS stock is hard to ignore.