Origin Agritech Ltd. (NASDAQ: SEED) is off to a pretty strong start to the trading session this morning, following up on the strong gains that we saw on the stock Friday morning. While the company has not released any news via SEC filing or press release, there is a very good reason for the gains. Today, we’ll talk about:
- Why SEED is headed up;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
Why SEED Is Headed Up
While Origin Agritech hasn’t released any news this morning, the stock is running for the top. It all started with how the stock was trading about a week ago. At the time, the stock was headed down and building up short interest. That is, until mid-last week when the company said that it entered into a Share Subscription Agreement with Longhan Investment Management. As a result of this agreement, Longhan would purchase 1,397,680 shares of the company’s common stock at a price of $7,743,147.20.
The large investment proved to be a bode of confidence in SEED stock, changing the game for the company. Not only did this investment provide important funding for the company, it also caused investors to cheer, pushing the stock upward late in the week last week. As we head into another week, shorts seem to be continuing to abandon ship as the bulls take hold. So, this is essentially a short squeeze at its finest. Keep in mind that short squeezes have the potential to really move the values of stocks, so SEED could go far further on this run.
What We’re Seeing From The Stock
One of the first lessons that we learn when we dive into the market is that the news causes moves. While there was no news issued today, news from late last week seems to be leading to a short squeeze that has the potential to create tremendous gains. As is just about always the case, our partners at Trade Ideas were the first to alert us to the movement. At the moment (8:15), SEED is trading at $9.24 per share after a gain of $1.25 per share or 15.64% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on SEED. In particular, we’re interested in two things. First and foremost, we want to see just how high this short squeeze is going to push the stock. We’re also interested in following the use of the funds procured by the company through the Share Subscription Agreement that was announced last week. Nonetheless, we’ll keep a close eye on the news and continue to bring it to you as it breaks!
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