Sellas Life Sciences Group Inc (NASDAQ: SLS) is screaming for the top in the market this morning, following the dramatic gains that we’ve seen from the stock over the past week. However, with no news out by way of press release or SEC filing, many are wondering what’s going on.
Well, it seems like the Wall Street Bets Redditors are at it again, pushing a short squeeze to get hedge funds who short the stock out of it. Here’s what’s going on:
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- Wall Street Bets Targets Sellas Life Sciences
- Why This Short Squeeze Could Be Huge
- What Analysts Think About SLS Stock
- Risks to Consider Before Buying SLS Stock
- Final Thoughts
Wall Street Bets Targets Sellas Life Sciences
As mentioned above, Sellas Life Sciences is running in the market this morning for seemingly no reason. There have been no press releases or SEC filings for some time. So, what’s the deal?
It all circles back to Wall Street Bets.
The Reddit group that’s taking aim at hedge funds who push stock prices down through massive short sells has latched onto SLS.
The reason is simple. Across the Reddit page, messages are being shared suggesting that it’s a horrible thing that hedge funds would short stocks of companies that are doing compelling research in the field of oncology, and I happen to agree.
At the end of the day, SLS is working to bring new treatment options to patients with few other options and a dire prognosis. So, the fact that hedge funds see this as a target to attack and bring the value of their shares down is mind boggling.
Nonetheless, the Wall Street Bets Reddit Army has yet another battle in its war on hedge funds, and it seems to be winning that battle.
Why This Short Squeeze Could Be Huge
Any short squeeze has the potential to yield significant gains. That’s no different from what we’re seeing today. However, I believe that the gains have the potential to be exacerbated in a big way for multiple reasons:
- Aggravation. The members of the Wall Street Bets army are aggravated with the fact that hedge funds can attack any stock they’d like with little-to-no recourse. Moreover, the fact that so many would short a company that’s working to bring so much good to the lives and families of cancer patients is disgusting. This drive to give these hedge funds what they deserve is enough to send the stock soaring.
- Short Interest. The short volume ratio on SLS stock sits at about 32%. That’s a massive number, showing that short interest on the stock is overwhelmingly high. As more and more of the hedge funds and other investors who have shorted the stock start to abandon ship, demand for shares will rocket, and so too will the company’s stock price.
- Ultra-Tiny Float. The public float on SLS is just over 11 million shares. That’s incredibly tiny, meaning that the supply of shares on the open market is minimal. As such, any real increase in buying volume will set the law of supply and demand in place. With minimal supplies and high demand, the price of the stock has no other choice but to rocket.
With these three factors in mind, it’s clear that the short squeeze has massive potential and is likely far from over.
What Analysts Think About SLS Stock
Analysts love Sellas Life Sciences stock. At the moment, there are two analysts covering the ticker, both of which rate the stock a buy. Moreover, price targets range from $8 to $12 per share, with a median price target of $10, representing the potential for tremendous gains.
Risks to Consider Before Buying SLS Stock
If you’re going to invest in a stock, whether it be SLS stock or otherwise, you’re going to have to be willing to accept risk. In the case of Sellas Life Sciences, the most significant risks include:
- Clinical Risk. Sellas Life Sciences is a clinical-stage oncology company. As a result, it is at the mercy of the results of its clinical trials. Should a clinical trial fail, significant losses may be the result.
- Regulatory Risk. Once all clinical trials have been completed, SLS must look to regulatory authorities for approval to market their treatments. Should these authorities find holes in the data, and a rejection take place, significant losses may happen.
- Penny Stock Risk. Finally, SLS stock is a penny stock. That means that it is subject to higher levels of volatility, making it difficult to make buy and sell decisions when trading the stock.
At the end of the day, any stock you buy will come with risk. However, when it comes to SLS, the risks may be outweighed by the potential reward. The company is working to develop several therapeutics for people with cancer, and doing a great job of it. Should even one of these therapeutics be approved, the market potential is dramatic.
Beyond the long term, the short term looks good as well. Wall Street Bets is on this one, pushing short selling hedge funds out. With such a small public float, the stock could see dramatic short run gains.
All in all, SLS stock is one to watch.