Nothing strikes more fear in the hearts of stock market bears than two simple words: short squeeze. Like a tsunami, a short squeeze can wreak havoc on unexpectant bears as they frantically rush to cover short positions, inadvertently driving prices even higher in the process. The parabolic surge is the stuff of dreams for bulls as they see account values spike with joy. Meme stocks thrived on short squeezes in 2021.
The formula for a short squeeze includes a high short interest, a small float and a surprise catalyst or two. Here are 3 stocks with the potential for the proverbial spark in a kerosene-soaked warehouse-like short squeeze to trigger.
Symbotic
Symbotic Inc. (NASDAQ: SYM) is a robotics and artificial intelligence (AI) company specializing in warehouse automation. The business services sector company designs and constructs automated warehouse robot systems to enhance efficiency and productivity. It embodies three secular tailwinds: AI, automation and Internet-of-Things (IoT). It counts retail giants Walmart Inc. (NYSE: WMT), Target Co. (NYSE: TGT) and Albertsons Cos. (NYSE: ACI) as some of its largest customers.
Walmart took an 11% stake in the company and has integrated Symbiotic into all its 42 regional distribution centers. The company has plans to offer warehouse-as-a-service (WaaS) through a joint venture, GreenBox Systems, with major investor SoftBank. While SYM has a large 356 million share float, it has a high short interest of 27.13%. Check out the sector heatmap on MarketBeat.
Surging Growth
Symbotic reported a fiscal Q1 2024 GAAP EPS loss of 2 cents, missing 2 cents profit consensus estimates. Revenues surged 78.6% YoY to $368.45 million, slightly missing consensus estimates of $368.84 million. The company provided flat in-line guidance for fiscal Q2 2024 for $400 million to $420 million versus $402.34 million consensus estimates.
Symbotic CEO Rick Cohen was upbeat and commented, ““Fiscal year 2024 is off to a solid start with strong financial and operational results. I am pleased with the trajectory and goals we have planned for the rest of the year. We will continue to innovate and build deployment capacity to support growth and increased profitability for our stakeholders.”
Daily Symmetrical Triangle Pattern
The daily candlestick chart for SYM illustrates a symmetrical triangle pattern. The descending upper trendline formed at $59.82 on November 28, 2023, capping lower highs on bounces. The ascending lower trendline formed at $30.60 on November 13, 2023, bouncing higher and lower on pullbacks. SYM is nearing the apex point as it gets ready to either break out through the upper trendline or break down through the lower trendline.
The daily relative strength index (RSI) is attempting to coil off the 48-band. Pullback support levels are at $38.99, $37.22, $33.93 and $29.62.
Symbiotic analyst ratings and price targets are at MarketBeat. Symbiotic peers and competitor stocks can be found with the MarketBeat stock screener.
Intuitive Machines
Intuitive Machines Inc. (NASDAQ: LUNR) provides space exploration services to enable human and scientific exploration on the moon. The company manufactures lunar landers that deliver payloads comprised of cargo and scientific instruments on the moon. The company is contracted with NASA for multiple missions. Intuitive Machines is also developing a lunar terrain vehicle (LTV) that can provide mobility on the moon’s surface. The company has a small 25.7 million share float and a 21.82% short interest. However, it filed for an offering of $300 million in class A common stock and also the resale of 159.81 million shares of class A stock by selling stockholders.
Fourth-Quarter 2023 Earnings
Intuitive Machines contracted backlog rose to $268.6 million at the quarter's end, driven primarily by the first NASA OMES III task orders. Revenues were $30.6 million, driven by three NASA Commercial Lunar Payload Services (CLPS) initiative contracts, down from $38.6 million in the year-ago period. Full-year revenues were $79.5 million compared to $85.9 million in the year-ago period. Full-year operating losses were $56.2 million compared to a loss of 5.9 million in the year-ago period. The company closed the quarter with $54.6 million.
Intuitive Machines CEO Steve Altemus commented, “Exactly one year after going public, Intuitive Machines launched its IM-1 mission, and one week later, on February 22, 2024, we successfully landed, marking the United States’ first lunar landing in over 50 years.” Altemus continued, “The successful landing, recognized by the White House, NASA, and our commercial customers, fundamentally disrupted the economics of landing on the Moon while substantially retiring the costs of developing a lunar program.” Get AI-powered insights on MarketBeat.
Daily Descending Triangle
The daily candlestick chart on LUNR has a descending triangle pattern. The descending trendline formed at the $13.25 swing high on February 21, 2024, as it capped bounces at lower highs. The flat-bottom lower trendline formed at $5.05. The daily RSI has been drifting around the $46 band. Pullback support levels are at $5.05, $4.46, $3.76, and $3.38.
Intuitive Machines analyst ratings and price targets are at MarketBeat.
Wayfair
Wayfair Inc. (NYSE: W) is an online furniture and household products retailer for consumers to access through its e-commerce platform. Accessibility and convenience are two drivers for its success against brick-and-mortar furniture competitors. Rather than shuffling through physical showrooms and dealing with traffic, parking, and weather constraints, customers can sift through collections seamlessly at the click of a mouse. The company has also implemented free shipping, a loyalty program and white glove delivery options.
Outperforming Brick-and-Mortar Competitors
Most furniture retailers are experiencing revenue declines, like Haverty Furniture Cos. (NYSE: HVT) with a 24% YoY Q4 2023 revenue decline and La-Z-Boy Inc. (NYSE: LZB) with a 12.6% YoY fiscal Q3 2024 revenue decline, respectively. Wayfair experienced 0.4% revenue growth in its Q4 2023 quarter. It should be one of the first to recover when interest rate cuts commence. Year-over-year operating margin3 expansion."
Daily Ascending Triangle
The daily candlestick chart on W continues to trade in the daily ascending triangle pattern. Just as it appears to start breaking down through its lower ascending triangle, buyers come into potentially holding the line. The daily RSI also continues to float sideways around the 53-band. Pullback supports remain at the $58.98, $55.30, $51.83 and $48.99 levels.
Wayfair analyst ratings and price targets are at MarketBeat.
