What happened

The stock market was modestly higher on Thursday morning as it tries to rebound from recent declines, but Tanger Factory Outlet Centers (NYSE:SKT) 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 (NYSE:GME) and AMC Entertainment Holdings (NYSE:AMC) 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.

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.