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Tesla is ‘the grandaddy of meme stocks,’ analyst says

Ihor Dusaniwsky S3Partners Managing Director of Predictive Analytics joins Yahoo Finance to discuss the return of the meme stocks.

Video Transcript

- So we were talking about chips, but we also have been watching the meme stocks very, very closely, of course. Joining us now is Ihor Dusaniwsky, S3Partners, Managing Director of Predictive Analytics. He also does a lot of research on short interest. Ihor, it's good to see you.

So as we look at the meme-stock activity that we've seen over the past few days, they happen to coincide with companies that have relatively-high short interest. What do we know about the movement versus that short interest, and the sort of relationship between the two?

IHOR DUSANIWSKY: Yeah, we'll see a much-larger shortage of pledger float in some of these meme stocks, in some of these smaller-cap names, especially because there's not only institutional holders, but there's also a lot of retail holders in the name. You've got stock like AMC, with 19%, shortage of pledger floats to BBBY with 58% of the float, when the street average is really just 5.2%. So we're talking about multiples of what the street's average is.

- Ihor, what do you think is triggering this latest move in the meme stocks? It kind of came out of the blue.

IHOR DUSANIWSKY: Yeah, yeah, I mean, Wall Street's gone to the Hamptons. But the meme stocks are back with a vengeance. We're seeing a lot of trading in these names. There really doesn't seem to be much fundamental reasons for this activity. I think it's a momentum-type move, where when you start getting a little bit of move on the charts, and more people start following and jumping in.

We are seeing short covering. There is a squeeze in name. These guys are in our squeeze-- score 100%, 100 out of 100 in our squeeze score. I mean, shorts have lost $1.7 billion in these three names, just in August. Not a good August for the shorts.

- So, Ihor, are we talking, like what we saw in 2021, to the moon? Or are we just talking suborbital space trip?

IHOR DUSANIWSKY: You know, that might have been a once-in-a-lifetime move with what we saw in the past. What we're seeing is just reemergence of the meme stocks on different time periods, where you've got this retail base that's moving the stock up. Institutions are long and short, the names. So we see longs in the hedge-fund community as well.

But when you've got this kind of trading volume, and you see shorts coming in and out of the market, you've got-- the price moves up.

- Ihor, is there-- have we seen sort of a spillover effect, a broadening, if you will, of retail interest in other stocks, as well, because of the spike in retail interest? Like, does trading volume overall, in other names, tend to go up as well when you see this kind of activity?

IHOR DUSANIWSKY: Yeah, absolutely. I think what we see is names that are popular, stocks like Coinbase, MSTR, Carvana, Beyond Mean, get the interest of the retail side. And these are big shorts. So what you've got is a bunch of institutional guys that are short to stocks, seeing this big blip up. The people with less conviction on these social sites are getting out of these stocks. Of course, there's a lot of volatility in price, which emboldens more retail buying in the name.

- How's Tesla holding up, Ihor?

IHOR DUSANIWSKY: Tesla, it's the granddaddy of meme stocks. You know, shorts are up for the year. They've-- still up for August because the price moves have recently gone down. But the guys lo-- Tesla shorts lost $150 million yesterday. So they're taking some pain along with the meme stocks.

- The King meme stock. Ihor Dusaniwsky, always good to see you, S3 Partners, Managing Director of Predictive Analytics. We'll talk to you soon.

IHOR DUSANIWSKY: Thank you for having me.