SOS Limited (NYSE: SOS) is screaming for the top in the premarket hours this morning. However, if you search SEC filings, you won’t find anything. Moreover, the only thing on the company’s Yahoo! Finance news feed is the fact that attorneys have been encouraging investors to join in on class action lawsuits.
So, why is it that the stock would be trading up in such a big way? It all seems to be associated with another Wall Street Bets led short squeeze. Here’s what’s happening:
The Wall Street Bets Army Is Back To Battle
As mentioned above, SOS is flying in the market this morning, but there’s no news that would act as a catalyst to this type of move. However, the catalyst seems to be a post by hkspeaks on the Wall Street Bets Reddit. In the post, the author writes:
Tomorrow we all buy, 20% of the float is short, and tomorrow they will cover. We can initiate a short squeeze over the next 5 trading days. This will require everyone to participate. Whether it is 10 shares, or 10,000 shares, We need your Diamond hands here.
Crypto’s will fly in the month of April and May, and SOS will be installing their third batch of mining rigs, by April 14th. We need to accumulate shares before the PR next week.
These Rigs will make $SOS the largest Crypto miner in the world. They are currently the largest ETH miner.
We have been coordinating a mass buy for tomorrow morning. Currently, we have 64 Stocktwits members on board, and I have a team of 15 investors through SOC capital who will participate with 150k.
Join our movement tomorrow morning. Remove all stop losses, and lets jam the order book.
That’s a pretty strong post on the Wall Street Bets platform, and it seems to be leading to the movement today. After all, hkspeaks is right about just about everything said here.
SOS is a heavily shorted stock, and with all the calls for investors to join class action suits, the short interest has been climbing. At the same time, investors are expecting news out of SOS with regard to the install and launch of new mining machines that, if all goes well, could make the company the largest crypto miner in the world.
At the same time, the public float on the stock is relatively small, lending a hand to the Wall Street Bets Redditors to be able to really move the needle here.
So, all told, this looks like a massive short squeeze in the making.
What About SOS Stock Beyond The Short Squeeze
Beyond the short squeeze, SOS stock is one to consider. Sure, there are concerns about the company following a short report about a month ago, but if the company is doing everything it says it is, there’s massive potential here.
As mentioned in the Reddit post, the company has been aggressively expanding its cryptocurrency mining capabilities. In fact, it recently entered into an agreement to purchase enough mining machines to make it the largest crypto miner in the world.
As cryptocurrency values continue to soar to record levels, the company is gearing up to take advantage of the growth in the space, and that’s exciting news, albeit speculative.
So, What’s With All The Class Action Stuff?
As mentioned above, a search on Yahoo! Finance will result in several attorneys seeking defendants for their class action lawsuit. So, what’s behind the suit? Well, that all has to do with the short report from Hindenburg Research and Culper Research, suggesting that the company is a scam, living on false statements.
Of course, SOS has refuted the claims made by Hindenburg and Culper, but that hasn’t been enough as the stock took dramatic losses and continued to fall, up until this concerted effort to force a short squeeze.
Is SOS A Long Term Play?
That’s a hard one to call? The fact of the matter is that while cryptocurrency may be the next big thing, anything associated with the industry is a speculative bet. Moreover, if Hindenburg and Culper are right here, the company may be nothing more than a shell, with very little of value to offer to investors.
On the other hand, I’m a glass half full kind of guy.
All in all, Hindenburg and Culper are short sellers with a reason to spread negative information. They profit off of the declines. If SOS is indeed doing everything it says it is, it will soon be the largest cryptocurrency mining company in the world, at least by mining capacity, and regardless of what the long-term view of crypto looks like, these digital currencies are overwhelmingly valuable and mining them at the scale SOS plans to at current prices would yield dramatic annual revenues and profits.
So, as a long-term play, I’m not sure. Things could go either way.
However, it’s hard to ignore the potential of the stock as a short term play with Wall Street Bets Redditors grabbing the bull by the horns.
The Bottom Line
From a long-term prospective, I’m not sure that I’d want to play in the murky waters that are SOS stock. However, in the short term, there’s tremendous potential here. The truth is that the Reddit team on Wall Street Bets has proven its ability to force short squeezes, creating compelling opportunities in the process. Today, we’re seeing the beginning of one of these moves, and if all goes well, the potential for short term profitability is hard to ignore.