Sashkinw
Following a ~99% rise on Friday on the back of a $1.2B licensing deal with Sanofi (SNY), COVID-19 vaccine maker Novavax (NASDAQ:NVAX) has forced some short sellers to unwind their positions and record about $255M in paper losses, Bloomberg News reported, citing data from S3 Partners LLC.
According to the financial data provider, Novavax (NVAX) is among Wall Street’s most heavily shorted stocks, with more than $50M of short interest.
The sudden surge in the Maryland-based biotech has left traders betting against its stock at a so-called short squeeze, where they are forced to repurchase NVAX shares to exit their losing positions. This phenomenon, known as short covering, can send the stock even higher, increasing their losses further.
“We expect a rib-crunching short squeeze in Novavax, with short sellers taking huge losses on the market open and closing out positions throughout the day,” noted Ihor Dusaniwsky, managing director of predictive analytics at S3.
“Many short sellers may hold on for a while and look for better exit prices over the next few days,” he added.
Despite its record gain yesterday, Novavax (NVAX) continues to trade more than 96% lower than its pandemic-era peak in February 2021.
