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Here's Why fuboTV Stock Jumped Today

By Jon Quast - Updated Jan 27, 2021 at 12:16PM

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This is one of the most obvious targets for a short squeeze.

What happened

Shares of fuboTV (FUBO -7.43%) jumped today (as of 11:30 a.m. EST, they were up 23%), but the stock is extremely volatile right now, so this is subject to change quickly. And there's reason to believe this short-term volatility will continue in the days to come, because short squeezes are all the rage among investors these days.

So what

When someone shorts a stock, they're trying to make money when it goes down. But if it goes up, they could be forced to cover by buying shares and ending the trade. This is called a short squeeze. Bearish investors are forced to buy shares, creating demand that makes the price temporarily go up -- further complicating things for investors who are still short.

A businessman draws a parabolic growth curve on a chart.

Image source: Getty Images.

A group of traders banded together and forced a short squeeze on the heavily shorted GameStop stock. The 8,000% one-year returns have truly been once in a lifetime. And now investors far and wide are looking for other stocks with a lot of short interest

That's where fuboTV comes in. Data from FINVIZ.com shows that fuboTV is the sixth most-shorted stock with a market cap greater than $300 million, among stocks on major exchanges. According to Yahoo! Finance, 63% of the stock's float is sold short. This isn't as much as GameStop, but it's still quite a lot.

This has made fuboTV stock a buying opportunity for some, looking to replicate the epic gains from GameStop stock.

Now what

To be sure, fuboTV has been a polarizing stock over the past few months. Bulls appreciate its healthy paid-subscriber growth and the monetization opportunities that come with such a large user base. Specifically, the company believes it has an opportunity to profit from sports betting. But bears will point out that, in the meantime, its primary service (streaming subscriptions) is a money-losing endeavor. Hence the high short interest.

Personally, I wouldn't be surprised to see this growth stock get squeezed more from here. How high can it go and how long can it last? No one knows. That's why it's a good idea for bulls to stay focused on the long-term thesis. Fortunately, when you own shares of a company, you don't have to worry about getting squeezed. You can patiently hold while your thesis plays out in the years to come.

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Stocks Mentioned

fuboTV, Inc. Stock Quote
fuboTV, Inc.
FUBO
$2.99 (-7.43%) $0.24
GameStop Corp. Stock Quote
GameStop Corp.
GME
$89.15 (-7.26%) $-6.98

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