Has SPRT's Short-Squeeze Play Run Out of Steam?

Buy-and-hold strategies continue to be the norm for most investors. Picking high-quality companies, with excellent cash flows and bright futures, is a top method for building wealth over the long-term. Read More... The post Has SPRT's Short-Squeeze Play Run Out of Steam? appeared first on TipRanks Financial Blog.

Has SPRT's Short-Squeeze Play Run Out of Steam?

Buy-and-hold strategies continue to be the norm for most investors. Picking high-quality companies, with excellent cash flows and bright futures, is a top method for building wealth over the long-term.

Lately however, many retail investors have made fortunes buying short-squeeze stocks. Whether investors classify these stocks as meme stock plays or short-squeeze plays, companies like Support.com () have been highly volatile of late.

SPRT stock traded around the $2 level a year ago. On Aug. 27, this stock hit a high of nearly $60 per share, before falling more than 80% to its current levels.

Thus, the question for SPRT stock is whether the party is over, or another short-squeeze surge could be on the horizon. Let's dive into what key drivers investors should have on their radar for this stock.

I currently remain neutral on this stock, for various reasons. (See Support.com stock charts on TipRanks).

Why is Support.com Stock Going Down?

A massive sell-off is currently underway with SPRT stock, and this stock has garnered a ton of attention accordingly.

However, the retail movement appears to be strong. Investors looking at short positions increasing are focusing in on the idea that this stock has a higher likelihood of squeezing. However, what seems to be the case (or at least what the data suggests), is that short-sellers are doubling down on their positions as they see a profit opportunity here.

Accordingly, SPRT stock could be the next high-profile hedge fund versus retail battlefield.

As per the latest updated short interest data, there has been a steady increase this year in the short percentage of the free float. Considering the utilization and short interest in SPRT stock, this company has become a hot-button topic among those on r/WallStreetBets, and elsewhere.

Obviously, short-sellers view the valuation of Support.com as untenable. However, retail investors have reason to be bullish. These kinds of short interest level and borrow fee rates are incredible. There's a high potential of this stock squeezing, relative to most stocks in the market.

Who will win? Right now, we don't know. However, SPRT stock is certainly shaping up to be an intriguing and highly volatile stock to watch from here.

Short Squeeze Prediction of SPRT Stock

Retail investors certainly believe they have the potential to bring SPRT stock and other short-squeeze stocks back to life. Those bullish on the short-squeeze potential note that the IPO price of Support.com stock was around $90 per share when this stock went public. Asserting that this stock couldn't breach this level in a squeeze-type scenario perhaps isn't unfounded.

However, Support.com remains a stock with generally bearish sentiment right now. The bears are winning, as evidenced by stock's recent drops. If this momentum continues, there's little hope for those betting on a short squeeze.

That said, predictions that SPRT stock could surge to more than $100 per share have many retail investors hungry right now.

Bottom Line

Support.com is a company that perhaps perfectly describes what a momentum stock is. When times are good, this stock surges. However, when the momentum turns, the downside can be disastrous.

Accordingly, SPRT stock is only a viable option for those willing and able to handle the volatility.

Disclosure: At the time of publication, Chris MacDonald did not have a position in any of the securities mentioned in this article

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

The post Has SPRT's Short-Squeeze Play Run Out of Steam? appeared first on TipRanks Financial Blog.

Source : Tip Ranks More   

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Bank Of America: Buying Back Stock in Bulk

Bank of America (BAC) is one of the biggest financial institutions worldwide, serving millions of individual consumers, businesses, and governments. The company offers a wide range of financial services, including Read More... The post Bank Of America: Buying Back Stock in Bulk appeared first on TipRanks Financial Blog.

Bank Of America: Buying Back Stock in Bulk

Bank of America () is one of the biggest financial institutions worldwide, serving millions of individual consumers, businesses, and governments.

The company offers a wide range of financial services, including banking, investing, asset management, and risk management services.

Bank of America is currently the second-largest U.S. diversified bank in terms of market cap. Valued at $349 billion, it comes after only JPMorgan Chase & Co. (). Banks are benefiting greatly from the ongoing excess supply of cash.

The monetary policy, and stimulus check frenzy, act as a great growth catalyst that keeps boosting its financials. Bank of America's latest results clearly reflect this. I am bullish on the stock. (See BAC stock charts on TipRanks)

Cheap Interest Rates, Strong Profitability

The dead-cheap (and continuously declining) interest rate climate has caused investors in the banking industry to worry for years now.

Generally, a decline in interest rates leads to compressed lending margins for banks. Low rates tend to flatten the yield curve, which usually unfavorably impacts net interest incomes, echoing the fact that banks aim to borrow short-term, and lend long-term.

Bank of America and its peers have felt the agony of lower rates, and the company's most recent quarter again reflected this. In Q2 2021, Bank of America's net interest income declined 6% to 10.2 billion.

Still, the company managed to deliver a net income of $9.2 billion, the highest quarterly bottom line in its history. This was driven by robust growth in consumer deposits, which grew 21% to $979 billion, lower credit costs, a $3.7-billion improvement in provision for credit losses, and record consumer inflows in investment products.

Massive Buybacks to Boost EPS

Since suspending buybacks during the Great Financial Crisis, Bank of America has been gradually boosting repurchases, rewarding its shareholders richly.

In 2019, the company's repurchases hit a record of around $28 billion. While management paused buybacks in the early stages of the pandemic to be prudent, it has started reaccelerating them. In Q2, buybacks amounted to $4.21 billion.

Considering the bank's record profitability, buybacks could reasonably return to the $7-billion range per quarter. Assuming a reasonable return to $28 billion per year, the company would be buying back around 8.3% of its shares outstanding each year at its current market cap.

Hence, not only should EPS considerably benefit from buybacks, but along with the stock's dividend yield, which currently hovers at around 1.9%, shareholders should enjoy a capital return yield north of 10%.

Valuation

Bank of America is currently trading at 14 times its next 12-month net income, which should be a rather reasonable multiple.

Besides the excess supply of cash during these times, which should continue benefiting the company through more deposits and investor inflows, its aggressive buybacks should act as a strong EPS catalyst, as mentioned above.

Strong dividend increases ahead should also incentivize investors to keep buying the stock at its current levels, which should prevent a valuation compression. The company's latest DPS hike was by an impressive 17%, after it successfully passed its stress tests.

Wall Street’s Take

Turning to Wall Street, Bank of America has a Moderate Buy consensus rating on the stock, based on six Buys, four Holds, and one Sell assigned in the past three months. At $42.32, the average BAC price target implies 7% upside potential.

Disclosure: At the time of publication, Nikolaos Sismanis did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

The post Bank Of America: Buying Back Stock in Bulk appeared first on TipRanks Financial Blog.

Source : Tip Ranks More   

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