Why GSX stock soared? Short-sellers are getting squeezed.......
The coronavirus is getting worse in China, and it's possible that investors believe that's a good thing for GSX.
GSX is a remote-education company in China, and its business grew substantially in 2020. And if COVID-19 gets worse in that country, it's possible 2021 will be another good year for this business.
According to The Associated Press, new coronavirus cases are causing the Chinese government to lock down two hospitals in Shanghai.
it appears investors might expect GSX Techedu's services will be in greater demand if the pandemic worsens in China.
This is further complicated by short interest in this stock. According to Yahoo! Finance, around half of the stock's float was sold short up until recently. If investors are buying shares over the last few days because of the news coming out of China, it could be causing a short squeeze, as short-sellers are forced to cover their bearish positions.
Over 22% of GSX stock is sold short, giving it a short interest ratio of almost 14 days (anything over seven days is considered a lot). While that indicates short-sellers are getting squeezed, or being forced to cover their positions at ever-higher prices, it's more just a phenomenon flooding the market at the moment.
the company is under fire from many popular short-sellers, who claim GSX Techedu is a fraud.
And the company has indeed admitted that it is under investigation from the Securities and Exchange Commission (SEC). While that investigation is ongoing and it may turn out that everything is above board, this has caused a lot of people to actively bet against this stock.
The company faces the possibility of being delisted from major U.S. exchanges if the SEC finds wrongdoing. Therefore, it's important to approach a GSX Techedu investment fully aware of this risk.
Investors shouldn't be swayed by these price swings, and investors would be smart to sit on the sidelines until GSX Techedu sorts out the battle taking place between short-sellers and those long on its stock.
fool.com/investing/2021/01/27/gsx-techedu-is-soaring-again-heres-why-its-up-286/
GSX is a remote-education company in China, and its business grew substantially in 2020. And if COVID-19 gets worse in that country, it's possible 2021 will be another good year for this business.
According to The Associated Press, new coronavirus cases are causing the Chinese government to lock down two hospitals in Shanghai.
it appears investors might expect GSX Techedu's services will be in greater demand if the pandemic worsens in China.
This is further complicated by short interest in this stock. According to Yahoo! Finance, around half of the stock's float was sold short up until recently. If investors are buying shares over the last few days because of the news coming out of China, it could be causing a short squeeze, as short-sellers are forced to cover their bearish positions.
Over 22% of GSX stock is sold short, giving it a short interest ratio of almost 14 days (anything over seven days is considered a lot). While that indicates short-sellers are getting squeezed, or being forced to cover their positions at ever-higher prices, it's more just a phenomenon flooding the market at the moment.
the company is under fire from many popular short-sellers, who claim GSX Techedu is a fraud.
And the company has indeed admitted that it is under investigation from the Securities and Exchange Commission (SEC). While that investigation is ongoing and it may turn out that everything is above board, this has caused a lot of people to actively bet against this stock.
The company faces the possibility of being delisted from major U.S. exchanges if the SEC finds wrongdoing. Therefore, it's important to approach a GSX Techedu investment fully aware of this risk.
Investors shouldn't be swayed by these price swings, and investors would be smart to sit on the sidelines until GSX Techedu sorts out the battle taking place between short-sellers and those long on its stock.
fool.com/investing/2021/01/27/gsx-techedu-is-soaring-again-heres-why-its-up-286/
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.