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Longeveron (NASDAQ:LGVN) stock was a hit for November. The share price went from a low of $2.84 to a high of $45. The price has now settled within a range of $17-$26. However, LGVN has become the second most shorted stock on the market. It has a short interest of 48.1%, as of December 10th 2021. Is there potential for a short squeeze to send the price up again?

What was the news?

The stock initially rose after the FDA approved Longeveron’s Lomecel-B for rare pediatric disease designation. Lomecel-B has been designated for treating Hypoplastic Left Heart Syndrome (HLHS), a rare and life-threatening heart defect in infants. The treatment is currently undergoing a Phase 2 trial following a positive Phase 1 trial. “We are encouraged by our Phase 1 clinical data, and the progress being made in the ongoing Phase 2 trial. Lomecel-B represents a unique cell therapy approach that could potentially be administered at the same time as surgery in these critically impacted infants,” said Longeveron co-founder and Chief Science Officer Joshua Hare.

More to note

LGVN released their IPO in February at a price of $10. The price has chopped around and fell to a low of $2.84 last month, down nearly 75% from the initial pricing. The FDA approval was timely for Longeveron to help booster the price. But at $45, short sellers were interested. The stock also has an insider ownership of 86% and a float of 2.6 million shares. A float of this size can see the price make dramatic changes over a short period of time.

Short squeeze?

With the current short interest in this stock, there is a potential this could squeeze. What would this depend on? More PRs and positive news for the company could lead to shorts covering their positions. Alternatively, high retail interest increasing the demand for this stock would cause the price to rally again. Groups such as WallStreetBets target heavily shorted stocks and buy in large quantities. Could we see LGVN become their next target?

What are the risks? If the current price is still overvalued, the price will continue to the downside. Shorts may increase their positions as the momentum grows. The demand would drop and longs who bought at high prices will likely close out for a loss.

So…

It is worth keeping an eye on. If we do see another rally, the reward could be exciting, possibly breaking above highs of $45. If you do go long or short, play with smaller size as there could likely be volatile price action.

AlphaPicks does not own a position in LGVN. To trade shares, register here with our preferred partner, EToro.

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