Support.com (SPRT) Stock Squeezes The Shorts

Support.com, Inc. (NASDAQ: SPRT) is screaming for the top in the premarket hours this morning. However, if you’re looking for press releases or SEC filings that might act as catalysts, you’ll be hard pressed to find anything. So, what’s the deal?

The gains seem to be a concerted effort among retail investors to push the shorts out of their positions. Here’s what’s going on:

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SPRT Short Squeeze In Play

While there hasn’t been any news issued by Support.com, there doesn’t have to be. Since the beginning of the year, retail investors have been flexing their muscles, taking to social media and building up crowds of investors that work together to push the prices of heavily shorted stocks up. 

That seems to be what’s going on right now. With the short percentage of the volume on the stock being around 31% and institutional investors offloading shares like crazy, the next big short squeeze target is right in front of you. 

Essentially, when the price of a heavily shorted stock like SPRT begins to tick up, those with short positions start to lose money. This triggers a race to cover, whereby those with short positions buy shares of the rising stock in order to close out their positions and cut their losses.

Of course, the market is a system centered around supply and demand. 

So, as the short sellers buy shares and cover their positions, they only send prices of the heavily shorted stocks further up. So, those that got in before the squeeze started tend to experience opportunities to generate significant gains in a very short period of time. 

This Could Go Far Higher

There are a few factors suggesting that this short squeeze could be massive, sending prices much higher than we’re seeing right now:

  • Low Float. First and foremost, the stock trades with a pretty low float, with only 17 million shares or so available to the public. So, when short sellers race to cover, there’s not a huge supply of shares available for them to cover their positions with. 
  • Heavy Shorts. At the same time, short interest is heavy. 20% of the float being short is exorbitantly high, but 30% is eye popping, suggesting that there are a massive number of sellers that will be racing to cover very soon. 
  • Social Awareness. Recently, SPRT stock has been one of the hottest topics on financial social media. As retail interest continues to grow and the word continues to spread on social media, this short squeeze has the potential to grow alongside interest. 

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The Bottom Line

The bottom line here is simple. If you’re one of the investors that has shorted Support.com stock, you’ve likely made a mistake that’s going to cost you big time as the short squeeze plays out. On the other hand, if you’re one on the bullish side, you’re likely in for big gains ahead. 

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