3 Short Squeeze Candidates In The Media Sector

3 Short Squeeze Candidates In The Media Sector

Low float stocks can be some of the most volatile stocks in the market. If you mix in a short squeeze, the potential short-term gains in a low float stock can be extreme.

A stock's float is the number of shares that trade freely on the public market. Because insiders and institutional investors don’t typically trade their shares on a daily basis, those shares don’t typically contribute to a stock's near-term liquidity.

Float is the number of shares that remain after accounting for insider and institutional ownership.

Why Is It Important? When a stock gains positive momentum in the market, momentum buyers can rush in all at once. If a stock has a high short interest, short covering can quickly ramp up demand for shares, triggering a short squeeze. Since low float stocks have relatively few shares trading freely, a major imbalance in supply and demand can serve as rocket fuel for the share price.

Buying a low float stock with high short interest isn’t a guarantee of a short squeeze. There still typically needs to be some form of catalyst to get the stock moving in the first place. However, traders can keep an eye on these stocks for any signs of life to try to catch most of a potential big move.

Short Squeeze Candidates: Here are three communication services sector stocks that have all the ingredients for a short squeeze.

Digital Media Solutions Inc (NYSE: DMS): This company is an advertising technology and performance marketing platform that went public in July 2020. From mid-November to mid-December, the stock more than doubled from $6.32 to $12.97, demonstrating its potential for volatility.

The stock’s 3.2 million-share float and its short percent of float of 22.4% are the perfect ingredients for a potential short squeeze. In addition, short squeeze traders have frequently targeted stocks trading under $15 per share this year, and Digital Media shares currently trade at just $12.18.

The stock is up 75% in the past six months, suggesting a lot of short-sellers are already feeling the heat and a potential short squeeze could be just around the corner.

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