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Why Shares of UWM Holdings Are Rising Today

By Bram Berkowitz - Jun 9, 2021 at 10:12AM

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There has been some discussion of the stock on the WallStreetBets Reddit forum and other social media.

What happened

Shares of wholesale mortgage lender UWM Holdings (UWMC 1.50%) had risen nearly 10.3% as of 11:05 a.m. EDT, after the company received some chatter on the popular Reddit forum WallStreetBets.

So what

On WallStreetBets' daily discussion for June 9, one commenter wrote, "Uwmc shorts getting crushed going to be squeezed real soon."

As of May 14, more than 20% of the float had short interest, so it is possible that a short squeeze could occur, in which the rising stock price of UWM forces short-sellers to close out their positions and buy the shares they are shorting, sending the stock price higher.

Blue line with arrow trending upward with chart in background.

Image source: Getty Images.

I haven't seen any other news that might be driving the company's stock other than the fact that UWM announced yesterday it plans to try to put pressure on competitors by price matching loans until June 20.

Now what

Based on the conversation I'm seeing on WallStreetBets and Twitter, I am more likely to believe that UWM's rising stock price today is due to the potential for a short squeeze and the meme-driven stock craze than anything fundamentally changing the company's position.

This means that like other meme-stock plays, UWM could be quite volatile in the near term. Invest with extreme caution.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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