Online furniture retailer Wayfair (W +24.88%) reported a solid quarter today, and shares soared. The stock hit more than a three-year high and surpassed $100 per share for the first time since early 2022.
Wayfair stock was trading near the morning high, up by 20.1% as of 10:40 a.m. ET.
Image source: Getty Images.
A short squeeze is boosting the stock
It appears a short squeeze is underway with Wayfair stock today. The stock had about 20% of its shares sold short as of mid-October, according to MarketWatch. That helps explain the sharp reaction to earnings.
Wayfair reported sales up 8.1% year over year. Revenue and adjusted earnings per share (EPS) both exceeded analyst estimates. CEO Niraj Shah called the quarter a "great success," and noted the company accelerated market share gains during the period.
NYSE: W
Key Data Points
The results were solid, but the market reaction looks to be driven by the short squeeze as short-sellers cover positions. Long-term investors should be happy, though, as Wayfair's business fundamentals have improved. The company generated $93 million in free cash flow versus negative free cash flow in the year-ago period.
While the high short interest resulted in an oversize stock surge, Wayfair does now seem to have its business is a good place.
