What happened
Shares of MicroVision (MVIS 0.25%) surged on Monday after traders on social media sites identified the stock as a potential short-squeeze candidate. As of 1:30 p.m. EDT today, the laser scanning company's stock price was up more than 25%.
So what
MicroVision has become a favorite stock among the 9.9 million members of Reddit's WallStreetBets group. With nearly 20% of the company's shares held short, traders are attempting to coordinate their purchases on social media sites in hopes of igniting a short squeeze.
MicroVision's stock price has soared in recent days. Image source: Getty Images.
By driving up the price of MicroVision's shares, these traders hope to force short-sellers to exit their positions. To do so, short-sellers would have to buy back the shares they shorted. This forced buying can accelerate an upward move in a heavily shorted stock's price, and this dynamic is likely contributing to the greater than 100% rally in MicroVision's shares over the past week.
Now what
MicroVision bulls have touted its scanning and sensor technology and its potential applications in fast-growing markets, such as augmented reality and self-driving vehicles. MicroVision is also rumored to be a possible takeover target for larger technology companies.
The bears, however, claim that MicroVision's stock has risen to levels that are unsupported by its current financial metrics and near-term growth prospects. Thus, they claim its share price is poised to fall.
Investors will soon have more information to factor into their view of this battleground stock. MicroVision is slated to report its first-quarter results after the market close on April 29.
