A Look At Pyxis, The Low-Float Tanker Stock Up 200% In A Month

Pyxis Tankers Inc PXS stock is tanking more than 20 percent on Tuesday after the stock skyrocketed more than 450 percent in a matter of days on no fundamental news from the company. The huge run-up appears to related more to the short-term market dynamics of a low-float stock rather than any improvements in the company’s outlook.

In fact, on Monday, Maxim Group analyst James Jang was so convinced that nothing has changed at Pyxis to justify the move that he downgraded the stock from Buy to Hold after a huge 103 percent one-day gain.

After checking with industry sources, Jang found no justification for the huge surge in share price.

Low Float

Pyxis’ float, the amount of shares that are free to trade on the open market, is a minuscule 1.2 million. From time-to-time, traders will bid up low-float stocks in an effort to force short sellers to close out open positions. According to Yahoo, Pyxis’ short percent of float is only 7.7 percent, but huge swings in share price can still trigger volatile short squeezes in these types of stocks.

The moves are compounded by so-called FOMO (fear of missing out) traders who jump into a stock to ride the short-term momentum. Because there are so few shares available to borrow, the trade becomes one-sided because new short sellers can’t jump in to drive the stock price back down.

It’s likely that Pyxis’ low float is playing a role in its recent volatility. Unless somebody knows something about the company that hasn’t made headlines just yet, traders should expect the stock to eventually head back down to around the $2 level where it traded a week ago.

Related Links:

Maxim Group: No Fundamentals Behind Recent Spike In Pyxis Tankers

Low-Float, Heavily-Shorted Stocks Are The Volatility Play Right Now