Eagle Bulk Shipping Inc (NASDAQ:EGLE)
Eagle Bulk Shipping is having an incredible day in the market today, with massive double digit gains. Today, we'll take a look to see if any fundamental news has caused the gains, what could be causing it if not, what we're seeing in the market, and what we can expect to see from EGLE moving forward. So, let's get right to it...
Any Fundamental News On EGLE?
Any time I see massive gains or losses on any stock, I take note and try to figure out why it's happening. One of the first things I look for is fundamental data that could be causing the move. So naturally, when I saw the massive gains on Eagle Bulk Shipping, I decided to do some research to see if there were any press releases, news of acquisitions, or anything else that could be causing such massive movement in the market. Unfortunately, there was nothing to be found.
What Could Be Causing The Bull Run?
With absolutely no fundamental news releases surrounding EGLE, there are two probable reasons for the gains we're seeing in the stock today. Here are the two possibilities:
- Short Squeeze – The first - and most likely - reason for the massive gains we're seeing in the stock today is a short squeeze. A short squeeze happens when too many shares are being held in short positions. As a result, there are less long positions available on the market. This can lead to high demand for long positions, causing the stock to skyrocket. In the case of EGLE, the short interest on the stock is relatively high. While it hasn't reached double digits yet, it is definitely high enough to cause a short squeeze.
- Investor Excitement – Another possible reason for the gains we're seeing on EGLE today is simply investor excitement. It is not uncommon for investors to notice slight upward movement and decide to join in on the gains. With every new investor that joins in, the momentum on the upward trend grows stronger. Of course, this leads to more excitement and more gains. Essentially, when investors have a strong belief that a stock is going to skyrocket, it becomes a self-fulfilling prophecy.
What We're Seeing In The Market Today
Whatever the reason for the gains we're seeing, there's no denying the fact that Eagle Bulk Shipping is having an incredible day in the market today. Currently (1:48), the stock is trading at $9.65 per share after a gain of $2.58 per share (36.49%) thus far today.
What We Can Expect To See Moving Forward
While I would love to say that I'm expecting to see a continuation of the gains ahead, that simply isn't the case. At the end of the day, gains in the market that are not preceded by strong fundamental news generally have a very short life span. In the case of EGLE, the stock is gaining big for what seems to be no reason at all. To make matters worse, the dry shipping industry has taken a huge hit over the last couple of years, leading to long-run hurdles that the company will have to make its way over. All in all, it would likely be incredibly risky to get involved in the movement now as EGLE is likely to take a dive at some point soon.