What happened
Shares of plant-based meat producer Beyond Meat (BYND +5.72%) jumped Thursday morning for what some might consider a surprising reason. As of 10:15 a.m. EDT today, shares were up more than 13%.
So what
The surge is likely the result of some commentary from CNBC's Jim Cramer. On his Mad Money show Wednesday night, Cramer said the WallStreetBets crowd should make Beyond Meat the next meme stock to drive a short squeeze. The comment came after recent gains in stocks including AMC Entertainment Holdings (AMC 2.75%) and GameStop (GME 1.06%) brought back visions of exponential gains in January as Reddit forum users banded together to push those shares higher.
Image source: Getty Images.
Now what
Cramer specifically noted that Beyond Meat has about 25% of its shares held short, setting up a scenario that could result in sharp gains from a short squeeze. High short positions were the trigger that drove users of Reddit's WallStreetBets forum in January to force short covering in GameStop. The result was an exponential rise in the share price, surpassing what most anyone believed had any fundamental business explanation.
Cramer was making two points with his suggestion yesterday. First, he is a believer in the underlying business and thinks Beyond Meat has a long runway for growth. But he was also pointing out that the retail-trading crowd that spurred the frenzy earlier in the year continues to have power in numbers, and could create a show of force in the stock market again. Long-term investors should focus on the former. Those who want to try to time gains from a short squeeze should only play that game with gambling money.
