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