Inexplicably, shares of embattled immunotherapy specialist NexImmune (NASDAQ:NEXI) are skyrocketing more than 190% despite efforts to dissolve the business. An earlier attempt to vote on the liquidation and dissolution of the biotechnology enterprise failed due to a lack of quorum. Given the uncertainty over the company’s future, a short squeeze in NEXI stock may be what’s materializing today, thus catching bearish traders off guard.
On Dec. 21, 2023, NexImmune adjourned its special meeting to close the business. However, according to the accompanying Form 8-K disclosure, no business was conducted to allow time to achieve a quorum. As a result, a new meeting will take place on Jan. 18 of this year at 10:00 a.m. Eastern. Further, the format will be virtual, not in person, thus potentially facilitating greater participation.
Leading up to the special meeting, NEXI stock is drawing much attention, although not for encouraging reasons. On the first day of December, exchange operators at the Nasdaq pulled the circuit breakers on NexImmune shares. The reason code cited for the action was listed as T12, a cessation of trading “pending receipt of additional information.”
Nasdaq certainly had reason to be skeptical about the dramatic rise of NEXI stock back then. Just the month prior, management had disclosed that it laid off “substantially all” its employees.
Short Squeeze Likely Fueled the Rise of NEXI Stock
Now, recent history is repeating itself, with NEXI stock shooting up more than 190% at the time of this writing. Thanks to the surge of the meme trading phenomenon, it’s natural to assume that a short squeeze may be influencing today’s proceedings. And that may be exactly what’s going on, although the data initially presents a deceptive picture.
According to Fintel, the short interest of NEXI stock sits at 4.96% of its float. While this metric indicates bearish traders borrowing shares for shorting activities, the figure itself is relatively unremarkable. Investopedia notes that short interest above 10% is typically considered “fairly high” while anything above 20% is considered “extremely high.”
Adding skepticism to the matter is that the short interest ratio for NEXI sits at 2 days to cover. That means short traders will need only two trading sessions to unwind their entire position. That isn’t that unusual.
However, the key here lies in the shares outstanding count. This metric lands at around 1.06 million shares. Therefore, the short interest doesn’t need to be too elevated for bearish traders to get panicked out of their position.
Notably, Fintel also points out that the short borrow fee stands at a whopping 228.35% APR. That suggests extremely high demand for shorting NEXI stock, but with few available shares. So, while the bears may only be swimming in shallow waters, the underlying current is incredibly strong, thus raising the net risk profile.
Why It Matters
Adding to the speculation that a short squeeze may be involved with NEXI stock today, Fintel notes that, on Dec. 20, the short interest sat at 5,656 shares while the short interest ratio was only 0.11 days to cover. Thus, compared to today’s short interest of 35,676 shares (at 2 days to cover), the difference in bearish activity has increased dramatically.
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On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
