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Why Beyond Meat Could Be Primed For A Short Squeeze

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Why Beyond Meat 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.

Beyond Meat Inc (NASDAQ: BYND) shares have had a fabulous run since the company's May 2019 IPO. While investors look forward to quarterly results from the company later this month, shares may be elevated due to a high level of short interest.

How Shorts Influence A Stock

Short interest becomes more meaningful for investors when short sellers want to exit their short positions, something which requires the short seller to buy the stock in order to return the shares they originally borrowed from their broker.

This is where the infamous "short squeeze" comes into play. "Short squeeze" is the phrase used to describe an elevated level of buying interest following periods of extreme bearishness when many market participants may be calling for downside in the stock.

Short Squeezes: What To Watch For

Investors may want to consider a few factors when looking for possible short squeeze plays:

  • Short interest in a stock
  • Recent downside pressure
  • Bearish sentiment while stock trading at or near 52-week/all-time highs
  • An upcoming or just-recently passed catalyst

See Also: This Beyond Meat Consumer Survey Highlights Some Challenges, Analyst Says

Potential Squeeze Ahead Of Beyond Meat Earnings

Beyond Meat's stock has short interest of around 35%, which indicates the percentage of a company’s total shares that have been shorted.

The short interest in Beyond Meat is huge: market participants consider short interest of more than 10% as a high level of short exposure.

Beyond Meat's shares skyrocketed a jaw-dropping 163% following its IPO last May. Since its IPO, the producer of plant-based meat substitutes has seen its shares gain around 345%.

Although UBS analysts expect the faux meat market to exhibit a compounded annual growth rate of 28% to become worth $85 billion by 2030, Beyond Meat may find it challenging to repeat its triple-digit revenue growth going forward.

The stock was down 2.32% at $112.07 at the time of publication Thursday.

Photo courtesy of Beyond Meat.

 

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