GoPro Has Serious Short Squeeze Potential

GoPro Inc GPRO shares are up 6.9 percent on fairly heavy volume on Friday. Without any major news driving the move, it’s likely the jump is being driven by a short squeeze.

According to shortsqueeze.com, GoPro currently has an extremely high short percent of float of 32.1 percent. GoPro has more than 32.7 million shares held short with 8.5 days to cover.

It’s easy to recognize the short-selling thesis when it comes to GoPro. In the past four quarters, GoPro has logged earnings losses and negative revenue growth in the 30–50 percent range. GoPro took a big piece of market share in the HD action camera market when it had little or no competition.

However, GoPro is now being undercut on camera prices by a number of competitors, and the company has struggled to adapt.

Chowdhry Commentary

Things have gotten so bad for GoPro that Global Equities Research analyst Trip Chowdhry has called the stock “total junk” and said GoPro “fundamentals just don’t exist.”

However, the danger in shorting stocks that have such a large short interest and such terribly low market expectations is that any bit of slightly positive news related to the Karma drone or other devices could trigger a huge short squeeze. Traders should watch closely to see if Friday’s unusual trading action could be the spark that ignites a massive squeeze.

At last check, shares were up 6.33 percent at $9.24.