The stock price of Sellas Life Sciences Group Inc (NASDAQ: SLS) — a clinical-stage biopharmaceutical company that focuses on the development of novel cancer immunotherapies for various cancer indications in the United States — is trading at over 50% pre-market today as of 4:37 AM ET. This follows continued momentum from this week as the stock price of the company had increased 34.10% on Tuesday, February 2.
One of the biggest reasons for the stock price increase has to do with due diligence about the company conducted by users on Reddit, Discord, Twitter, Facebook, StockTwits, etc. Users on Reddit forum “WallStreetBets” noted that Sellas is considered undervalued and highly shorted despite the company recently highlighting the development of novel cancer immunotherapies.
In the forums I have been seeing, a number of users on the aforementioned platforms said that it is frustrating that a company focused on developing cancer cures is being heavily shorted by hedge funds so they decided to counter those actions with a short squeeze.
A short squeeze happens when a stock price increases higher and forces traders who bet the price would fall to buy it in order to prevent further losses – which adds to upward pressure on the stock price. The short-sellers borrow the shares that they believe will fall in price in order to buy them after it falls. If they are wrong about the price falling, then the short-sellers are forced to buy it at a higher price and pay the difference between the price that was set and the sales price.
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