Greenwich LifeSciences Short Squeeze Interest
The most recent Greenwich Life Sciences (GLSI) news was positive. The company is entering phase 3 trials for its breast cancer immunotherapy drug GLSI-100, a development that brings it closer to the possibility of commercializing the treatment.
Market participants were apparently unsurprised by the positive news, with the share price barely budging since August 11, when the announcement was made.
Meanwhile, GLSI short-term interest has increased over the past approximately 30 days, increasing the risk of a short squeeze occurring in the future if Greenwich LifeSciences successfully meets the endpoints of this late-stage clinical trial .
GLSI Live Stock Price Chart
Is a short squeeze a real possibility for GLSI stocks?
In this article, we analyze some relevant metrics that might help you assess the possibility of a short squeeze.
What is a short press?
A short squeeze is a market event triggered by an unexpected rise in the price of a heavily shorted security such as a stock.
Short sellers are betting on a stock’s falling price. They borrow stocks, usually from a brokerage, and sell them in the hope that their price will go down in the future.
They then sell the stock and wait for the price to drop, then buy it back when the price drops enough.
The difference between the selling price and the buying price is the short seller’s profit.
If the price starts going up instead of down, the investor may suffer significant losses.
If a sharp rise in price occurs, short sellers are forced to quickly cover their open positions by buying back the asset. Market participants notice this increase in demand for the stock and respond by pushing the asking price higher.
Short cuts tend to be brief, but the consequences for those holding a short position in the security can be devastating as the losses can be limitless.
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What is Greenwich LifeSciences?
Greenwich LifeSciences is a biopharmaceutical company developing a treatment to prevent breast cancer from coming back in post-surgery patients.
Founded in 2006, the company was renamed Greenwich in 2018 as it began work on developing its immunotherapy treatment. In 2020, the company went public, listing its shares on the Nasdaq Capital Market under the symbol GLSI.
In the first six months of 2022, Greenwich lost $1.35 million. This is a pre-revenue company whose product(s) have not yet been cleared for commerce by the United States Food and Drug Administration (FDA).
The GLSI-100 immunotherapy treatment has entered Phase 3 trials and has begun the transition to pre-marketing, meaning the company is preparing to mass-produce the treatment for launch primarily in the United States and in Europe.
Phase 3 trials are being conducted by Baylor University and a “consortium of leading cancer centers”. A phase 2b trial led by the MD Anderson Cancer Center produced strong data, according to a GLSI presentation, with “0% recurrence over a median follow-up of 5 years, if fully immunized, compared to 11% recurrence rate on placebo in 96 patients, immunity peaked after 6 months, little or no side effects.
The CEO of Greenwich LifeSciences is Snehal S. Patel, a former investment banker and biochemical engineer with extensive experience in the healthcare and biotechnology industries.
Since its IPO, shares of Greenwich have risen 100%.
Over the same period, the technology-heavy S&P 500 (US500) and Nasdaq 100 (US100) indexes gained 13.2% and 2.6%, respectively.
Greenwich LifeSciences short-term interest
Greenwich LifeSciences’ short-term interest was trending lower until mid-August. However, the company’s announcement of the start of Phase III trials has prompted short sellers to increase their bets that the stock will see a decline in the future.
According to data compiled by market beat194,500 shares of Greenwich LifeSciences were sold short as of August 15, which corresponds to 15.1% of the share’s free float.
Since then and through mid-September, the number of shares borrowed by traders has risen to 257,100, leading to an 810 basis point increase in short-term interest at Greenwich LifeSciences, which s amounted to 23.2% of the share float as of September 15.
The higher the short interest of a stock, the greater the possibility that it will be subject to a short squeeze if the price rises unexpectedly.
For Greenwich, a catalyst that could propel the stock price is the success of the phase III trial for GLSI-100.
A possible date for the end of this late-stage trial was not offered by the company, but the FDA’s website says it typically takes companies about one to four years to complete these studies.
Can Greenwich LifeSciences shares see a short squeeze soon?
Based on the number of years it may take Greenwich to complete the Phase III trial for its GLSI-100 treatment, the odds that such an event could materially affect the stock price in the near term are weak.
Other information about GLSI stock that could also influence the price includes the coordinated efforts of retail or institutional traders who may choose to accumulate a significant amount of short-term call options. This could trigger a market event called “gamma compression”, as brokers may be forced to buy the stock to hedge their exposure to these derivatives.
The latest surge in short-term interest from Greenwich LifeSciences may indicate that market participants believe the company’s Phase III trial will not achieve its primary goal.
If this happens, the stock price could take a dramatic drop, as the chances of the company starting to generate revenue in the future could be significantly reduced.
Finally, according to data from MarketBeat, it will only take one day for short sellers to fully cover their open positions based on the stock’s average trading volumes. The current one-day ratio reduces the chances that a short squeeze can occur.
What are analysts predicting for Greenwich LifeSciences stock price?
Only one analyst appears to cover Greenwich LifeSciences stock, as of October 5, 2022, based on data from market beat. HC Wainwright analyst Yi Chen reiterated his buy rating for the company in July 2021 and set a 12-month price target of $78 per share.
A valuation from Aegis was provided in January 2021, when the company launched a hedge with a “buy” rating and a price target of $75.
These ratings may not be very relevant, as more than 12 months have passed since the two companies last updated their views on Greenwich.
Meanwhile, estimates of Investor Portfolioa third-party algorithmic forecasting service, indicate that the price of GLSI stock will fall to $0 by February 2023.
None of these estimates should be considered a recommendation to buy or sell GLSI shares.
Investors are encouraged to perform their own adequate due diligence on a company before making an investment decision.
Remember that past performance does not guarantee future returns. And never trade money you can’t afford to lose.
What is Greenwich LifeSciences current short interest?
As of September 15, 2022, 257,100 shares of Greenwich LifeSciences are sold short, resulting in a sell interest of 23.2% based on the stock’s current free float. The dollar value of those positions was $2.66 million, based on the stock price at the time, according to data compiled by market beat.
How does a short squeeze work against Greenwich LifeSciences?
Since about a quarter of the float in GLSI stock is sold short, if the price rises significantly, short sellers will be forced to buy the stock to close their positions in order to limit their losses. This increase in demand for GLSI will cause market participants to increase their asking price and the higher the demand for GLSI shares, the higher the price may rise.
Will GLSI stock go up?
According to the price targets provided by the two analysts who analyzed the stock, the value of GLSI should climb to more than 70 dollars per share. Estimates of Investor Portfolio indicate that the stock could fall to zero by the end of 2023.
Remember that analysts and algorithm-based forecasting websites can and do get their predictions wrong. Always do your own research. And never invest more than you can afford to lose.