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First, GameStop and AMC led the charge in 2021, opening up an entire base of new investors.
Next, investors flocked to Bed Bath & Beyond after it was revealed that Ryan Cohen owned a significant stake in the company, pushing the stock up 300% in 17 days, which then fell sharply in the days following after documents revealed the activist investor had sold his entire stake.
Now, attention has shifted to a stock that is down 90% year-to-date, but up 150% over the last month.
Read more: Kevin O'Leary Applauds Activist Stake In Wix Stock: 'They Stop Idiot Management From Making Stupid Mistakes'
What happened: Avaya Holdings Corp AVYA, a company that specializes in products and services that enhance business communications, issued $600 million of new loans and convertible bonds back in June, then badly missed earnings guidance and disclosed uncertainty about its ability to continue as a going concern.
This led to a Sept. 8 investigation by Schubert Jonckheer & Kolbe LLP into whether Avaya violated state and federal laws and utilized misleading business information to entice investors.
The company replaced its CEO in August with Alan Masarek, a SaaS adjacent veteran that intends to bring his experience from Vonage to create a new talent-driven organization with a culture of agility, and tech innovation.
That’s not all, the company — similar to Bed Bath & Beyond — has an activist investor at its front door.
Avaya's board of directors received an Aug. 22 letter from Theodore King, a 35-year-old software entrepreneur who bought a 15% stake in the company and laid out a turnaround plan.
“Between now and Oct. 1st,” King wrote, “when the 8% 2027 Notes become convertible – prior to this date, if there is a sharp upward movement in price, there would likely be significant short covering of the 14.98M shares currently short, which would reflexively need to be purchased and likely with sequential failure to deliver events.”
Why it matters: Avaya and its partners want the company's strategy to be more transparent and to have a clearer direction. A roadmap focuses on creating the most cloud-based solutions that partners and customers want to sell.
“The theme is innovation without disruption. Our customers, via our partners, on very different, individualized cloud journeys … customers want innovation, and that innovation is coming over the top — typically on the cloud — and they don’t want to have the disruption underneath. We can uniquely provide that,” the newly appointed CEO said.
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