šŸØ Daily Scoop: Is Short Squeeze Drama Over? | Trade Stocks

Is Short Squeeze Drama Over?

By Wed, Mar 3, 2021

Hey Scoopers,

The COVID-19 vaccine good news was not enough to get the market out of the red zone. ā€”Ā More on that in the “Overall Market” section.

Beyond the overall market, a small home builder surprised investors with its better than industry performance, while a 3D printing company got thumbs down from J. P. Morgan analysts. ā€”Ā More on that in the “What’s Up?” and “What’s Down?” sections.

By the way, do you think the social-media-fueled short-squeeze drama is over? ā€”Ā More on that in the “Water Cooler” section.

But, first, here is a recap of what happened in the market yesterday:

Market Recap

  • U.S. markets: Indices finished Tuesday in the red.Ā Scroll down to the “Overall Market” section to read more.
  • Cryptocurrency:Ā BitcoinĀ price has retracted to $48K per coin.

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Good News Wasn’t Enough

The stock market ended Tuesday in the red zone. Even President Biden’s announcementĀ about the anticipated COVID-19 vaccination of all adults in the U.S. by the end of MayĀ did not give enough momentum to the indicesā€™ to reverse their directions.


Surprised Investors

So, what happened?

Shares of Hovnanian Enterprises Inc (Ticker:Ā HOV) were up by more than 33% on Tuesday, pushing its shares up by 80% since the beginning of the year. Hovnanian is a residential home builder. The company was in the spotlight on Tuesday afterĀ releasing an astonishing fourth-quarter report. The home builder outperformed many of its larger competitorsĀ with 16.3%Ā revenue growth compared to Q1 2020. After the announcement, many investors turned bullish about the company.


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Downgrading Hit Hard

So what happened?

Shares of 3D Systems Corp (Ticker:Ā DDD) were down by almost 20% on Tuesday. 3D Systems is a 3D printing company. Unexpectedly,Ā it announced a delay in its 2020 Annual Report. Along with the announcement, it reported a $79 million revenue decrease inĀ the fourth quarter. The bad news was enough to turnĀ J. P. Morganā€™s analyst bearish, downgrading the stock to a Sell position.


Is Short Squeeze Drama Over?

So what happened?

We all know that earlier in 2021, shares of GameStop (Ticker:Ā GME) made it to the headlines for the so-called short squeeze drama. The drama brought executives from several brokerage firms, hedge funds, and Redditors to the House of Representatives to provide their point of view on why and how the short squeeze panned out. After that, most people assumed the short squeeze drama was over.

Not too fast…

On Tuesday, shares of Rocket Companies Inc (Ticker:Ā RKT) have skyrocketed. The stock price is up by almost 90% since Friday. On Tuesday, it closed priced at $41,60, against the closing at $21,85 last week. Why is this related to short squeeze? The stock rally seems to be a repetition of the short-squeeze pheromone becauseĀ Rocket Companies was also heavily shorted. Tuesday’s rally resulted in halting the trading of the stock three times, similar to how GameStop’s short squeeze panned out earlier in the year.

The short squeeze drama continues…

If you have any questions, or suggestions let us know by emailing us atĀ members@tradestocks.com. We look forward to hearing from you.

About the Author

The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card