Could UWM Be The Next Target For Reddit Traders?

UWM Holdings Corp UWMC could be the next stock to make a GameStop Corp GME-type of rally amid recent chatter on Reddit threads, according to an article from the Detroit Free Press.

What To Know: Traders on the subreddit r/wallstreetbets are well-known for targeting stocks with high short interest. As of April 30, UWM had a 13.23% short interest. Some Reddit traders have recently nominated the stock as a potential short squeeze candidate.

A short squeeze occurs when a stock moves sharply higher after traders who sold the stock short (bet that it would fall) are forced to cover their positions by buying back the shares they borrowed to sell, which adds to the upward momentum of the stock, thus "squeezing" it higher.

See Also: UWM Holdings Stock Falls On Q1 Report, Share Buyback Announcement

Why It's Important: "I wouldn't short our stock though, to be honest with you," UWM CEO Mat Ishbia told Detroit Free Press reporter JC Reindl. "Our business is really strong and continues to grow."

UWM is one of the largest wholesale mortgage lenders in the United States.

Price Action: UWM has traded as high as $12.45 and as low as $6.25 since it made its Wall Street debut on Jan. 22.

At last check Wednesday, the stock was down 1.9% in premarket trading at $8.26.

Courtesy photo.