Please ensure Javascript is enabled for purposes of website accessibility

Is Express Next in Line for a Short Squeeze?

By Rhian Hunt - Jan 28, 2021 at 10:22AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Fashion retailer Express Inc. could be the next battleground for Redditors vs. hedge funds.

Game and consumer electronics retailer GameStop has undergone a spectacular short squeeze recently, with its stocks exploding from approximately $40 a week ago to over $260 currently. Hedge funds massively shorted the stock, but retail investors organizing on Reddit and Twitter bid its value up by going long on the company. 

Now, Bloomberg reports, other heavily shorted companies which have suffered especially from the pandemic may be next in line for a short squeeze. One such company is fashion retailer Express (EXPR -5.24%), whose stock sold hovered around $1 in early January. The company's shares have since risen by some 406%, trading at $4.60 as of this writing.

A silver bull and bear figurine with a dollar sign between them.

Image source: Getty Images.

The Express pop reflects a larger trend at hand in the market today. Many retail investors have profited massively from the GameStop play, and are now looking for more profitable short squeezes. But Express, a company assigned a $1.50 price target by some Wall Street analysts, isn't likely to share the same fate.

That's because Express' short interest, or the amount of shares outstanding which investors plan to short, stands at just 13%. This figure is large compared to the market as a whole, but GameStop's short interest was over 100% of its shares when it began to trade up. Additionally, many popular trading platforms -- including millennial favorite Robinhood -- have halted trading on several highly volatile stocks, which include GameStop and Express, for the time being. While trading is expected to eventually resume, this tactic is a method to stop the squeeze and prevent further volatility and mania from taking over, potentially preventing some retail traders from losing too much money on the presumably inevitable way down.

It's possible that the momentum from GameStop transfers over into Express as eager investors seek the next gold mine on the cheap. But the movement is more likely to splinter, as several companies remain in discussion for the next short squeeze target and Express, while ripe for improvement, has far less short interest and therefore far less opportunity to squeeze.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Express, Inc. Stock Quote
Express, Inc.
EXPR
$1.99 (-5.24%) $0.11
GameStop Corp. Stock Quote
GameStop Corp.
GME
$122.86 (-1.22%) $-1.52

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
319%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.