Micro-cap stock %BeyondMeat (NASDAQ: $BYND) is seeing its share price surge as retail investors target the stock in a short squeeze.
In the past five trading sessions, BYND shares have risen nearly 30% as individual investors and traders treat the company as a meme stock.
Currently, Beyond Meat’s stock has a 36.7% short interest, among the highest levels on Wall Street. This means short sellers are betting that the share price will decline in the near-term.
A meme stock is a security that gains popularity among retail investors through social media.
A short squeeze occurs when the price of a stock rises to such an extent that investors who have sold short must also purchase shares in order to limit their losses, causing the price to rise sharply and quickly.
With such a high short interest, plant-based meat company Beyond Meat is a perfect candidate for a short squeeze, say market observers.
The company’s share price has declined 97% in the past five years as its %AlternativeMeat products failed to catch on with consumers or businesses.
There had been a lot of hype and hope around the company and its stock when it went public in 2019. But unfortunately, the early promise of plant-based meat alternatives never materialized.
The share price decline has driven the company’s market capitalization down to $327 million U.S., making it a micro-cap stock defined as any security with a valuation below $1 billion U.S.
At $4.28 U.S. per share, BYND is also a penny stock, defined as any security that trades for less than $5 U.S.
While Beyond Meat has been a disappointment, many investors are now piling back into the stock in hopes of making some quick money in a short squeeze.
This is an extremely risky situation as stock prices that get pumped up in a short squeeze often collapse quickly.
However, for Beyond Meat, which some analysts expect to file for bankruptcy, the current short squeeze may be the stock’s last gasp.
