People on this sub frequently rely on short interest and days to cover metrics that are published by FINRA bi-weekly. The argument then generally relies on, "Look guys here, high SI, high DTC, if this stock has a positive catalyst for this reason it can rip!". I have always had a couple of issues with those setups, one this is public info and everyone already knows it. Hedge funds may have more up to date non-public data from their broker network on the short availability, so what does looking at this delayed data bring to the table? The second is simply that if you are then relying on a positive catalyst (people frequently mention BioTechs with trial results pending) then aren't you really just making a bull case based on fundamentals? Sure the high SI may give it some extra juice. If we look at the truly technical setups then we have to consider the VW squeeze from 2008 and more recently the Avis Budget (CAR) from earlier this year. Read about those, even Matt Levine from Bloomberg has written extensively about it. These were triggered due to a combination of very low float and then someone revealed they had soaked up whatever had remained and at some point the SI is much greater than 100% FF and it becomes a mechanical squeeze.
Here is another fun story. Fundrise Innovation Fund (VCX) listed in March, had a reported NAV of $19 and it went to $575 within 5 days of the listing. I am a pre-IPO investor with restricted shares and we have obsessed about every single detail of this stock over at the Fundrise and VCX subs (feel free to check them out). Fundrise was a REIT company that stumbled into VC investing around 2022 and they built a great portfolio (Anthropic/OpenAI/SpaceX/Anduril/Databricks you name it and in high fraction of the portfolio). It was a closed end fund, meanwhile the REIT business was really struggling. So Fundrise came up with this genius idea of listing the CEF on the stock exchange and issuing its REIT division some shares in hopes of harvesting the premium. What we know is that VCX had 35.8 million shares out of which 30.8 were locked up. They issued around 2.7 million shares to their REIT affiliate and the restricted shareholders were given another 2.3 million as unrestricted. People had trouble transferring these over from the custodian (ComputerShare) and meanwhile this took off on wsb and the tiny float (they were slowly trickling in their piece 5% a day, this was a direct listing with no new shares offered) made it rip. This all made sense and then Citron published the famous short and it crashed. What happened a month later was very intriguing, it had slowly come down from $575 to about $75 till the 28th April but suddenly started running up again and hit $310. We all restricted share holders were very confused and some were mad at missing out on not being able to cash in 30x on our investment (earliest holders had paid $10). Some of us like me saw the opportunity to buy puts to ensure that we see some return. We all knew the post lockup tsunami was going to crush the price. The options were always quite expensive on this since the whole market knew the story but nonetheless it was worth paying for those. It has since trended down again albeit slowly and closed at around $55 on Friday. Then the surprise filing dropped yesterday. Remember I had earlier mentioned that the affiliate REIT was slowly trickling the shares at 5% volume to the market and they had close to 2 million shares to sell. Turns out the fund has to file an N-PORT and due to the MNPI rules they had to stop selling. They had stopped selling the shares on the 29th April and that is when it started ripping, low float with no natural supply was doing its trick. They only started selling again on the 2nd June and that's when it started its downward trend. Look at the filings for shares sold per day and the yahoo finance prices, it is something to look at and have the realization of how the setup worked.
Now to the interesting bit, the filing yesterday revealed that they are done selling their stake (inferred by most of us on the sub). They also pushed forward the lockup expiry date from Sep 18th to Aug 14th (they stated that the price discovery has been achieved lol, while it is really about them selling what they had and harvesting the premium to save their REIT). But with the tap turned off again from now on till Aug 13th, what will happen? The last reported short interest on this is 643k shares (out of the 5ish million floating around, mostly bag holders who bought too high and are stuck) and mostly options MMs since a lot of us have bought puts expiring in October based on the original lockup date. It is pretty clear that the stock crashes come Aug 14th. But it has such a low volume recently (86k shares on Friday) that all bets are off before then. I personally have puts and restricted shares and was not able to position myself with any share buys since the news dropped post market and it took us a while to digest and confirm that they are done selling. The options are expensive so shares might be a better bet if one concludes that this may go up again. It will be a fascinating watch. Leaving this here for your enjoyment!