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Zillow Could Be Primed For A Short Squeeze

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Zillow Could Be Primed For A Short Squeeze
  • This is the latest entry in Benzinga's "Short Squeeze Potential" series.
  • The article aims to make readers aware of a stock with short squeeze potential.
  • This week's short squeeze candidate: Zillow Group

Zillow Group Inc (NASDAQ: ZG)(NASDAQ: Z) shares have had a good run over the last month. While many investors are surely looking forward to some good news from the company, shares may have risen due to a high level of short interest.

How Short Interest Influences A Stock

Short interest develops when short sellers look for attractive points to exit their short positions, wherein they buy shares with the intention of covering for having sold the shares ahead.

This results in a “short squeeze,” or a situation when there is an elevated level of buying interest following periods of extreme bearishness when many market participants may be calling for downside in the stock.

Potential Squeeze Ahead Of Earnings

Zillow stock has short interest of around 27%, which indicates the percentage of a company’s total shares that have been shorted. Market participants typically consider short interest of more than 10% as a high level of short exposure.

Zillow’s shares gained almost 9% last week. In the last one-month period, the stock is up almost 10%. What’s more surprising is that these gains came despite the shares having jumped more than 49% over the past three months.

Zillow’s shares are trading close to their 52-week high of $51.56 and have surged significantly from their 52-week low of $28.47.

Zillow last reported quarterly results on Nov. 7, with a loss of 32 cents per share on revenue of $745.21 million. The company is scheduled to report its earnings for the latest quarter on Feb. 19. Analysts estimate earnings coming in at a loss of 35 cents a share on sales of $815 million.

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Zillow's New Homes Business Drives Big Revenue Jump, Pushes Stock Higher

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