TLDR: During COVID lockdowns, BNED reached a share price of $12.01. This time around, we estimate BNED may reach a conservative share price between $5 – $7 if retail is able to maintain the momentum started during trading hours today. BNED stock has striking similarities to GME and AMC being a household name and we believe a meme-like run is in store for the family friendly bookstore .
Barnes & Noble Education, Inc. (BNED) is currently the subject of intense market speculation, with many investors eyeing it as a potential candidate for a massive short squeeze. A short squeeze occurs when a heavily shorted stock’s price rises sharply, forcing short sellers to cover their positions by buying the stock, which in turn drives the price even higher. Recent developments suggest that BNED is primed for such an event. Let’s explore the key factors contributing to this potential short squeeze.
High Short Interest and Record Short Volume
BNED has a float of approximately 34 million shares, and on a recent trading day, the stock experienced its highest one-day short volume in history, with 24 million shares shorted. This indicates a significant bearish sentiment among investors, making the stock a prime candidate for a short squeeze. Additionally, as reported by Fintel and Ortex, there are currently zero shares available to borrow for short selling, further tightening the supply and increasing the likelihood of a squeeze.
Significant Reduction in Free Float
Recently, Greenhaven Associates acquired over 4.8 million shares of BNED, more than 9% of the company’s total shares. This acquisition has reduced the free float to around 4 million shares, significantly limiting the number of shares available for trading. This reduction in free float, coupled with the high short interest, suggests substantial short squeeze potential as the supply of shares becomes increasingly constrained.
Potential Strategic Transaction
Greenhaven is exploring a potential transaction with BNED that could be worth up to or more than $500 million. Although specific numbers aren’t out yet, the data suggests significant potential. This potential deal has sparked interest and speculation, indicating strong confidence in BNED’s future prospects.
Current Stock Performance and Analyst Projections
BNED is trading at $0.28, down from its recent high of $0.65 on May 17th. The stock has an average price target (PT) of $2.73, indicating a potential upside of nearly 875%. Some analysts project the stock could exceed $4, representing a gain of nearly 1,330%. The fair value of the stock is estimated to be $8 per share. This significant upside potential could attract more investors, increasing buying pressure and contributing to a short squeeze.
Strategic Initiatives and Financial Position
BNED has undertaken several strategic initiatives aimed at strengthening its financial position. These include a $95 million investment and the implementation of a short-term poison pill. The company’s focus on digital education solutions and cost-reduction strategies is expected to enhance profitability and attract investor interest.
Broader Market Trends and Sentiment
The broader market environment can also play a role in the potential for a short squeeze. Increased retail investor interest, driven by social media platforms like Reddit, can amplify these effects. The phenomenon witnessed with stocks like GameStop and AMC, where coordinated buying efforts led to explosive short squeezes, could similarly impact BNED.
Conclusion
Barnes & Noble Education, Inc. (BNED) is attracting significant attention as a candidate for a short squeeze, driven by its high short interest, significant reduction in free float, and potential strategic transactions. The stock’s substantial upside potential, coupled with strategic initiatives to strengthen its financial position, further adds to the speculation. While the ingredients for a short squeeze are present, investors should approach with caution and remain vigilant. Whether BNED will indeed experience a giant short squeeze remains to be seen, but the stock undoubtedly presents an intriguing opportunity for those willing to navigate its risks and rewards.