Late in January, as the WallStreetBets subreddit became a forum for rallying institutional buyers against short-sellers, the sector appeared to transcend rationality. Several firms that seemed to be past their peak saw their share prices temporarily rise due to the frenzy of actions that resulted amid the absence of any major changes to their underlying industries. And it wasn’t just well-known firms who were hit by these increases. When retail traders sought to generate short squeezes, almost any stock with a large proportion of its securities sold short could be pumped up with spectacular short-term profits. Ligand Pharmaceuticals (NASDAQ: LGND) was one of the lesser-known stocks to emerging from the situation. There are many reasons to assume that the biopharmaceutical saga is finished. That isn’t to say there aren’t always compelling reasons to invest in the stock.
Short-term interest rates have fallen.
When a person sells a stock short, they are betting on the stock’s price falling. The dynamics can seem complex, but they are very simple. Being “short” suggests that a lender purchased equity that they didn’t purchase and eventually sold it in the expectation of repurchasing it at a lower price in the future and returning it to the person from which they borrowed it.
If the stock price falls, the situation will carry out as anticipated, and the short-seller will benefit. If the market price rises, the seller must then purchase back the securities to return them, resulting in a loss of income. When a large number of short-sellers are in a position to lose money on a certain stock, it may cause a trading spree as they want to cover their positions and limit their losses, pushing the stock’s price much higher.
A quick squeeze is what happened to Gamestop and AMC Entertainment earlier this year, as well as several lesser-known firms like Ligand Pharmaceuticals according to nyse amc at https://www.webull.com/quote/nyse-amc.
Approximately 20% of Ligand’s outstanding securities were sold short from 2014 to the middle of 2018. Over the next year, the figure jumped to 67 percent. The leap drew the interest of the Reddit community, who bought in droves, more than tripling the stock’s value after it started trading in 2021. Even though the short squeeze’s feedback loop runs out of gas and Ligand’s stock price began to fall, the stock is now up 45 percent year to date, and the number of outstanding shares sold short has fallen to less than 10%.
Omni, the antibody development tool, creates human antibodies from animals using artificial intelligence and genetic engineering. These antibodies are used in studies by more than 40 biopharmaceutical firms and universities. You can check other stocks like nasdaq tlry at https://www.webull.com/quote/nasdaq-tlry.