Short squeeze on results But results that hit the mat on 1 June terrified short-sellers. De La Rue16 Jun 2020 11:05
Short squeeze on results
But results that hit the mat on 1 June terrified short-sellers. De La Rue hailed a “strong” start to the year, with “limited impact” from the coronavirus as it left full-year expectations unchanged.
A short squeeze is an extremely fast increase in the price of a stock. It happens in heavily shorted stocks when short sellers close their positions, driving prices higher. There’s an excess of demand by shorters because they are forced to buy at the higher price, and a lack of supply. This cascade effect pushes the price ever higher.The company spotlighted a series of contract wins totalling more than £100 million for its authentication division. These include a five-year deal with the Australian government to supply polycarbonate data pages for the country’s passports.
De La Rue added that its currency division had also seen “strong demand” with contract wins totalling 80% of its full-year printing capacity.
More short squeezes could be on the cards as we head further into earnings season. Bears beware.