What happened

Shares of GoodRx Holdings (NASDAQ:GDRX) popped on Monday after a Wall Street analyst said the stock could go higher. However, as we'll see, there might be a little bit more to it than that. But whatever the exact catalyst, GoodRx stock was up 9% as of 2:45 p.m. EST.

So whath

Vikram Kesavabhotla with Guggenheim initiated coverage of GoodRx today, according to The Fly. You see, GoodRx has only been a public company for a few months, and it takes time for firms to start doing analysis and issuing price targets. It turns out Kesavabhotla likes GoodRx enough to start the stock off with a buy recommendation and a price target of $52 per share.

A businessman draws an exponential growth curve on a graph.

Image source: Getty Images.

This is an encouraging outlook for GoodRx shareholders. The stock fell hard a couple of months ago when Amazon announced new initiatives that seemingly intrude on GoodRx's space. Some saw it as an omen that the days of its great growth and stellar gross margins were numbered. But Kesavabhotla doesn't seem to share that negative outlook for now. 

Now what

The news of Kesavabhotla's report broke today, so this is absolutely why GoodRx stock was up today -- at least in part. Here's the other part: Stocks with high short interest are soaring today in general. And it seems to have something to do with GameStop stock. At one point today, GameStop stock was up 145%, and it's up over 300% just this month. It's an epic short squeeze that's making some traders rich in record time.

Because of this, it appears they're looking for more stocks with short-squeeze potential. And that's why stocks like Beyond Meat soared today. The same could be true of GoodRx. According to Yahoo Finance, 26% of the stock's float is sold short. And according to Nasdaq, it would take short sellers six days to cover their positions. Both of these numbers are favorable for a short squeeze, and it's doubtful this detail escaped traders' attention.

For now, this could mean that GoodRx stock will be volatile. If traders start piling in, it could spark a short squeeze that sends shares higher, at least in the short term. But if this happens, an outsized portion of GoodRx shareholders likely wouldn't be interested in holding for the long term. They'd likely just dump their shares after they've made a quick buck. So shares could be volatile to the downside as well.

Therefore, now's a good time for GoodRx shareholders to review their long-term theses to ensure they're ready to ride the coming roller-coaster.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.