Koss Corporation (NASDAQ:KOSS), one of the high-flyers in the 2021 meme stock craze, is catching a bid today. This follows the return of Roaring Kitty, who helped kickstart the rise in GameStop (NYSE:GME) and other meme stocks in 2021.
The company, which produces headphones, has not made any announcements to support the surge. Its last press release was published on May 9, while its last Securities and Exchange Commission (SEC) filing was submitted on May 31.
Could a short squeeze be at play here? Possibly, Koss’s short interest as a percentage of float tallied in at 7.7% as of June 15, equivalent to 404,000 shares sold short. Generally, a short interest of 10% is viewed as high, while a short interest of 20% or more is viewed as very high.
KOSS Stock Surges 90% on Renewed Meme Interest
Koss’s cost-to-borrow (CTB) fee of 36.77% is also quite high, signaling high short seller demand. The fee represents the annual rate that short sellers must pay to borrow stock. It goes up when short demand is high and down when it is low. At the same time, a high fee can also influence short sellers to cover in an attempt to escape the high fee. There were, according to Fintel’s data source, zero shares of KOSS available to short at the time of writing.
In addition, KOSS has a very low float of 5.26 million shares, making it prone to volatile moves.
Koss’ Fundamentals Are Not Great
As for the company itself, the numbers aren’t very compelling. During the three months ended March 31, Koss’s revenue declined by 22% to $2.63 million. The company was also unprofitable with a net loss of $313,870 compared to a loss of $224,480 a year ago.
“A downturn in sales in the direct-to-consumer (DTC) space of nearly 30%, which appears to be a result of a slowdown in consumer spending amid high inflation, energy and borrowing costs, drove the overall decline in sales for the first nine months of the fiscal year,” said Chairman and CEO Michael J. Koss.
On top of that, Koss competes in a highly saturated market with well-capitalized competitors, such as Bose, Sony (NYSE:SONY) and JBL.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Eddie Pan 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
