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2 Overvalued Short Squeeze Stocks to Avoid

Published 08/30/2021, 04:45 PM
Updated 08/30/2021, 05:30 PM
© Reuters.  2 Overvalued Short Squeeze Stocks to Avoid

© Reuters. 2 Overvalued Short Squeeze Stocks to Avoid

Shares of some fundamentally weak stocks have hit record price highs over the past few months due solely to short squeezes triggered by social-media hype surrounding them. Heavily shorted stocks Support.com (SPRT) and SCWorx (WORX) are examples. They are struggling to stay afloat and are highly overvalued at their current price levels. We think that because these two stocks could witness a price pullback soon, they are best avoided now. Read on.Earlier this year, several short squeezes triggered by subreddit r/wallstreetbets wreaked havoc in the financial markets. Shares of struggling companies GameStop Corporation (NYSE:GME) and AMC Entertainment Holdings (NYSE:AMC), for example, skyrocketed in price, with retail investors betting against hedge funds. This trend is expected to continue because retail traders are expected to gain more influence over the market as sophisticated technology and zero-commission trading platforms gain prominence.

One objective of retail investors is to gain from betting on stocks that are being discussed on numerous social media platforms and might experience a short squeeze. However, while short squeezes can lead to eye-popping rallies in many stocks, those companies that have weak business models or other fundamental weaknesses should eventually see a pullback.

Short squeeze candidates Support.com Inc. (SPRT) and SCWorx Corp. (WORX) seem to have garnered significant attention lately in the ongoing retail trading frenzy. However, due to their weak financials and bleak growth prospects, these stocks are overvalued at their current price levels. Hence, we think they are best avoided now.

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Latest comments

Mainstream fincial "reporters" have become as relevant as politicians.
Mainstream fincial "reporters" have become as relevant as politicians.
Mainstream fincial "reporters" have become as relevant as politicians.
Where I cannot advise anyone to buy AMC or GameStop at these levels, I will say for them to hold and sell AMC around $55 and GameStop at $220. They will both tumble about 15% to 20% after the squeeze is over. Though that will offer a short-term buy and hold until the next squeeze.
It's anybody guess to stick a price on it, but feel free to execute at these levels, nobody knows how high/low this can go at the moment
One more financial news to avoid: StockNews
Do they still pay to release this kinda article lol never gets old. I wonder who takes this seriously by now Everyone knows whats right
Buy more and HODL…Thanks!
We will see what happens in the next couple of weeks. You can write whatever you want.
Because 3000 per share of a company that's undermining Democracy is a good buy ( if your rich and hate 'other' people being free). However, several hundred thousand 'other' people think GME and AMC are a good buy. If those companies somehow pull themselves together due to the influx of 'other' peoples money, well, your owners will begin to fear a democracy breaking out in financial markets. Can't have that. Must mobilize super rich owned media to convince 'other' people to give up. LONG LIVE AMAZON!! LONG LIVE AMAZON!! Or maybe..... not?
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