Short squeeze alert for SMCI stock

Published: Tuesday, April 8, 2025 at 1:47 pm

SMCI Stock Faces Potential Short Squeeze After Rally Fueled by Tariff Hype

Super Micro Computer (SMCI) experienced a dramatic surge on Monday, April 7th, rallying over 10% during the trading session. This impressive intraday reversal, which saw the stock close at $33, was largely attributed to market optimism fueled by unsubstantiated rumors of a potential 90-day postponement of tariffs by the Trump administration. This news, however, has since been debunked.

The rally continued into Tuesday's pre-market trading, with SMCI shares opening near $35.20, a further 6.66% increase. This overnight performance has put pressure on short sellers who bet against the stock. Data from Fintel shows the SMCI short volume ratio, which had dropped to 38.81 on Friday, April 4th, jumped to 54.23 on Monday, April 7th. This indicates a growing number of investors are betting against the stock.

The bearish sentiment is rooted in the belief that the rally is unsustainable. The underlying issues that caused the initial decline in SMCI's stock price remain unresolved. The supposed tariff postponement has been proven false, and trade tensions between the U.S. and China, as well as the U.S. and the EU, are escalating. The EU has even proposed a 25% retaliatory tariff.

Adding to the uncertainty, the exact cause of SMCI's surge is unclear. While the company recently announced a partnership with Nvidia, the impact of this agreement is still developing. The rally may be driven by a combination of past successes, anticipated long-term benefits from the Nvidia partnership, and a general feeling that the stock was oversold. This lack of clarity makes the stock's current position precarious. Short sellers could face a "short squeeze" on Tuesday if the rally continues, though the volatile trade environment makes a rapid reversal possible.

BNN's Perspective: The situation surrounding SMCI is a classic example of market volatility driven by speculation and geopolitical uncertainty. While the short-term gains are exciting, investors should proceed with caution. The lack of fundamental drivers for the rally, coupled with escalating trade tensions, suggests that the current price may not be sustainable. Prudent investors should carefully assess the risks before making any decisions.

Keywords: SMCI, Super Micro Computer, stock, short squeeze, rally, tariffs, Donald Trump, Nvidia, trade war, market volatility, short sellers, intraday reversal, NASDAQ, stock market, investment, financial news, stock analysis, market analysis, trading, pre-market, Fintel.

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