What’s happening with Super Micro Computer Stock?

What’s happening with $SMCI? 

Super Micro Computer shares have moved over 200% in 2024 as the stock experiences what’s known as a “short squeeze”. 

The basics of a short squeeze is that Wall Street and traders will look for stocks that are heavily shorted (bet against) and begin buying them up in order to force the short positions to close. For a short trader to close their position, they need to buy it back at that price. Shorting a stock means you’re borrowing shares from your broker at a price, you take the shares and try to sell them to the market at a lower price, then give the shares back to your broker and keep the difference. So if the stock’s price begins to rise and there’s a lot of people shorting the stock, then the buyers will begin to force the short sellers to buy back their positions because their losses can literally go on to infinity as long as the stock is going up. We saw this happen with $GME (GameStop) a few years ago. 

Now, the current reading of $SMCI’s short float % is only 10%, so only 10% of its shares are being shorted. This is a fairly small amount, but the stock also has a low float. The float is the amount of shares available to the public market, 50M shares is not much, so any big of buying volume can make them push. 

The combination of low float and high short % makes for a perfect short squeeze recipe. Bulls are “squeezing• sellers out. Add the fact that they're involved in artificial intelligence and it becomes even hotter, driving retail buyers into it too.