What Happened?
Shares of online dating app Bumble (NASDAQ: BMBL) jumped 4.9% in the afternoon session after a significant short interest in the company's stock fueled a 'short squeeze'.
Data showed that more than 21% of the company's publicly available shares were sold short by investors betting the price would fall. When a heavily shorted stock begins to rise, these investors often rush to buy back shares to cut their losses. This wave of buying can create upward pressure on the stock's price, a dynamic known as a short squeeze. The stock's upward movement suggested that this scenario may have played out, as buyers overpowered sellers.
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What Is The Market Telling Us
Bumble’s shares are very volatile and have had 28 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 8 days ago when the stock gained 4.1% as data pointed to a potential short squeeze, as the stock rallied amid high levels of bearish bets placed against it.
The move occurred during a broader market rebound for tech stocks. Data showed that short interest in Bumble had recently increased, with bets against the company rising to 12.49 million shares from a previous 11.60 million. This level of short interest represented nearly a quarter of the company's publicly available shares. When a heavily shorted stock's price starts to rise, sellers who bet on a decline may be forced to buy back shares to close their positions and prevent larger losses. This buying activity can, in turn, push the stock price even higher.
Bumble is down 54.5% since the beginning of the year, and at $3.63 per share, it is trading 58% below its 52-week high of $8.64 from February 2025. Investors who bought $1,000 worth of Bumble’s shares at the IPO in February 2021 would now be looking at an investment worth $51.56.
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