#CVNA 5th most shorted stock per MarketWatch today. Up 11% yesterday and 6% this morning. Business model changed two days ago. Squeeze?

Submitted by BriantheGardener t3_11eect0 in wallstreetbets

#CVNA 5th most shorted stock per MarketWatch as of Feb. 28th 8AM. Yesteday the stock popped 11% and this morning it popped again and is still up today 7%. During their earnings call two days ago, the company committed to changing its model from growth to profitability . They agreed to aggressive cost-cutting. CEO Ernie Garcia III "Over the next six months, we will work to complete an estimated $1 billion in annual cost reduction" .

Does anyone think this is enough to get the shorts to cover in a squeeze? With the stock steadily rising yesterday and today, both lackluster days for the general market, I feel like this might be a strong short term options play to the upside. Thoughts?

[UPDATED WEND MARCH 1]

Both days showed average volume. 24M on Monday and 19M Tuesday(the 10-day average daily volume is 23M), so it does not seem like the shorts have been covering. Short volume is around 50% of float per MarketWatch this week which equates to approx. 95M shares. It would take almost four(4) days to cover the shorted shares. I would think we would have to see 45M plus in volume per day to indicate any substantial short covering, so Monday and Tuesday increases may just be bargain hunters after the target price doubling by CitiGroup from $5.5 to $11/share, or market value reassessment after digesting the earnings call.

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Meat__Head t1_jadh54o wrote

With a 17% increase in 2 days, the ship has likely already sailed 👍

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BriantheGardener OP t1_jae1u19 wrote

Update here: 21% increase over the past 2 days. Its still moving higher steadily all day today. Do you think there is any more life left in it here?

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Meat__Head t1_jae2e1f wrote

Idk. I always try to put myself in the shoes of the people holding double digit gains in 2 days. I myself would lock profit in those scenarios 👍

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VisualMod t1_jadgp2i wrote

>I think the shorts are going to cover soon. The stock has been steadily rising and there seems to be a lot of positive momentum behind it. I would definitely consider buying some call options as a way to profit from this squeeze.

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Igotabwc7 t1_jadqjdl wrote

yes squeeze incomingimg

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BriantheGardener OP t1_jaeii5h wrote

Last two days up 11% and 6% respectively. Both days showed average volume: 24M on Monday and 19M today(10-day average daily volume is 23M, so it does not seem like the shorts have been covering, or at least not a lot of panicky volume. Short volume is around 50% of float. I would think we would have to see 35M plus in volume per day to indicate any substantial short covering, so these increases may just be bargain hunters after the target price doubling upgrade by CitiGroup to $11/share. I'm holding my calls until I see some significant volume over 35M. What do others think here? Thoughts?

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VisualMod t1_jadgog9 wrote

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chachdolences t1_jadrv2q wrote

The company is clearly changing from a growth model to one of profitability, this could suggest shorts will cover and short term long call option purchasing would be lucrative.

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BriantheGardener OP t1_jadtjjp wrote

I agree with this and am watching today, the price keeps moving up steadily for the last two trading periods. If it keeps going, I hope the pressure will be too great and folks will start to cover faster and off we go to the races $$$$. Lets go logic!!!

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G0dPlayz t1_jae0amg wrote

calls incoming

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BriantheGardener OP t1_jae1kez wrote

Now up almost 10% today in addition to the 11% yesterday. I hope this is the calm before the storm!!!

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