Immunotherapy specialist NexImmune (NASDAQ: NEXI) noticed a substantial surge in its stock on Wednesday, coinciding with the management’s meeting on January 18 to discuss the company’s dissolution.
NexImmune (NEXI) shares soared by over 160% on Wednesday despite ongoing attempts to dissolve the company. A prior effort to vote on the liquidation and dissolution of the biotechnology firm fell short due to a lack of quorum. The unexpected surge in NEXI stock, amidst uncertainty about the company’s future, suggests the possibility of a short squeeze, catching bearish traders off guard.
On December 21, 2023, NexImmune (NASDAQ: NEXI) postponed its special meeting to finalize the business’s dissolution. The accompanying Form 8-K disclosure revealed that no business was conducted to provide additional time to secure a quorum. Consequently, a new meeting has been scheduled for January 18 at 10:00 a.m. Eastern. Notably, this meeting will be held virtually, enabling broader participation.
In the lead-up to the special meeting, NEXI stock is garnering significant attention, but not for good reasons. On December 1, the Nasdaq exchange operators invoked circuit breakers for NexImmune shares, citing reason code T12, which means the trading was suspended “pending receipt of additional information.”
Nasdaq’s skepticism was warranted, given the sharp surge in NEXI stock. Just the month before, the company’s management had revealed that they had laid off “substantially all” of its employees.
NexImmune (NASDAQ: NEXI) Stock Rally Points to Short Squeeze
Recent events are mirroring past occurrences, with NEXI stock surging over 190% at the current moment. Given the resurgence of meme trading, it is reasonable to suspect a short squeeze’s influence on the recent market action. However, the data initially provides a misleading impression.
As per Fintel, the short interest in NEXI stock is 4.96% of its float. Although this signifies bearish traders borrowing shares for shorting activities, the figure is unremarkable. According to Investopedia, short interest exceeding 10% is generally deemed “fairly high,” and anything surpassing 20% is considered “extremely high.”
Introducing a sense of doubt to the situation is that the short-interest ratio for NEXI is at two days to cover, indicating that short traders would require just two trading sessions to liquidate their entire position. This is not uncommon.
But the crucial part is the shares outstanding count, which is about 1.06 million. So, the short interest doesn’t have to be very high for bearish traders to feel uneasy about their position.
Fintel also notes a high short borrow fee of 228.35% APR, showing strong demand for shorting NEXI stock with limited available shares. Though the bears may not be deeply involved, the risk is high.
Why It Matters
Fueling the speculation of a potential short squeeze in NEXI stock Wednesday, Fintel highlights that on December 20, the short interest was at 5,656 shares, with a short interest ratio of only 0.11 days to cover. However, the current short interest stands at 35,676 shares with a 2-day coverage ratio, indicating a significant surge in bearish activity compared to the previous data.
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