Tupperware (NYSE:TUP) has become the new “it” stock among retail traders this week and is setting up to record its largest weekly gain on record. On Monday, TUP stock closed higher by 75%, marking its highest one-day gain as a publicly traded company. On TradingView’s list of most active stocks, Tupperware currently takes home first place.
These gains may have very well been driven by a short squeeze. As of July 15, there were 9.69 million shares of TUP stock sold short with a value of $6.22 million. That’s equivalent to a short interest as a percentage of float of 27%. Generally, a short interest of 10% is perceived as high, while a short interest of 20% is perceived as very high.
Popularity of TUP Stock Takes Off
Tupperware’s cost to borrow (CTB) fee is also worth taking a second look at. The metric currently tallies in at 75.49% and represents the annual fee that short sellers must pay to borrow stock. On July 18, the fee was as low as 7.11%, meaning that it has almost risen by 1,000% in less than two weeks. Once the CTB fee gets high enough, it can result in short sellers selling out of their short stake by buying the underlying stock in a bid to escape the high fee. This could result in a higher stock price due to the forced buying.
Meme stock investors have taken a particular interest in companies left for dead in recent years. TUP stock certainly seems to fit into that classification, as it is currently dealing with an array of issues. In June, the New York Stock Exchange notified the company that it was in noncompliance with its continued listing policies. One of its points of noncompliance was having an average closing price below $1 over a consecutive 30 trading-day period. Tupperware has six months to cure this deficit, which would involve having a minimum price of $1 and an average closing price of at least $1 over a consecutive 30 trading-day period on the last trading day of any calendar month or the last day of the cure period.
In March, Tupperware released its preliminary fourth-quarter results. Net sales slid lower by 20% year-over-year (YOY) to $313.7 million while the firm’s diluted loss per share from continuing operations was 79 cents.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
