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Here is WallStreetBets' New Short Squeeze Target

By Matthew Frankel, CFP® - Updated Mar 4, 2021 at 10:04AM

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This retail stock is soaring Thursday, and there's a good explanation.

What happened

The stock market was modestly higher on Thursday morning as it tries to rebound from recent declines, but Tanger Factory Outlet Centers (SKT 3.28%) is a major standout. Just a few minutes after the market's open, Tanger's stock price had climbed by as much as 25% and was still up by more than 15% as of this writing.

So what

There isn't any company-specific news driving Tanger's stock price higher. But there's still a good explanation for today's move.

Sale rack in a clothing store.

Image source: Getty Images.

Tanger appears to be the latest target of the Reddit forum WallStreetBets, which fueled the massive short squeezes in companies like GameStop (GME 11.54%) and AMC Entertainment Holdings (AMC 2.95%) just a few weeks ago.

As of early Thursday morning, Tanger was the No. 1 trending stock in the WallStreetBets community. And it's not hard to see why. Nearly 40% of Tanger's float is currently sold short, making it the second-most-heavily shorted company in the market, just slightly behind GameStop itself.

Now what

To be sure, a short squeeze doesn't have any effect on the underlying business. And it's important to note that unlike some of the other major short targets, Tanger actually has a profitable business with real growth potential. Although the COVID-19 pandemic caused several of the outlet mall owner's major tenants to declare bankruptcy, occupancy is well over 90% at Tanger's properties, and customer traffic in January was at 99% of comparable pre-COVID levels.

As a final point, it's worth noting that the timing of this short squeeze could potentially work to Tanger's advantage. The company recently approved a plan to sell as much as $250 million worth of shares on the open market to raise capital, so the higher share prices could allow Tanger to do just that with as little dilution as possible.

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Stocks Mentioned

Tanger Factory Outlet Centers, Inc. Stock Quote
Tanger Factory Outlet Centers, Inc.
SKT
$17.31 (3.28%) $0.55
GameStop Corp. Stock Quote
GameStop Corp.
GME
$128.46 (11.54%) $13.29
AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
AMC
$12.23 (2.95%) $0.35

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

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