Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion.
More than a year ago, I bought shares of Evofem Biosciences Inc. I have been there as it’s fallen and fallen and fallen. I bought more, and then those shares fell, too. So I bought more, and then those shares fell. Short sellers were living it up.
After too long of not being in compliance with NASDAQ’s rule that shares must be above $1 to continue to be listed, Evofem did a 1-for-15 reverse split.
On the Q1 2022 earnings call, the CEO said that Phexxi was FDA approved, and the non-hormonal birth control gel–which is an amazing concept–was ready for market but needed as many insurers as possible to OK to pay for the drug.
The CEO also mentioned that Roe v. Wade looked like it was going to be overturned by the Supreme Court, and while that was terrible, there may be a positive impact on the share price.
So I bought more.
And then the short sellers came in and forced it below the $1 mark again.
I bought more at $0.35. And then more again at $0.35.
But I didn’t set a calendar thing to remind me when the Supreme Court was due to go on summer break.
On Friday of last week, the Supreme Court overturned Roe v. Wade. The price of Evofem shot up. The stock was so heavily shorted that a tripling of the price was probably uncomfortable for the shorts.
It looked to me like the short sellers were doing what they could to depress the price of the stock by selling more of that. And I think they’re continuing to do that.
That means they’re digging themselves in deeper and deeper because the more they short, the more they’ll have to buy back to cover.
I didn’t buy more on Friday, and by Monday I’d felt that was a mistake.
So Monday during premarket trading I bought a bunch more shares.
Now, Evofem is in trouble (i.e. is facing delisting) if they continue to be out of compliance with the $1 rule. It’s in the interest of the short sellers to try to get it to close under $1 before the stock closes at $1+ for 10 consecutive days.
But I think that there’s at least one hedge fund that’s buying up the shares that the shorts are selling. What’s more fun than making money? Making money while screwing over your competitor! And if it bankrupts your competitor, extra special!
If there is a fund that is trying to make sure that the stock closes no lower than $1, shouldn’t it be an easy decision to buy shares of EVFM at all sub-$1 prices?
This is my first short squeeze. I never did anything with GME, AMC.
I don’t know what the long weekend will do. I also don’t know if the music will stop tomorrow.
I’m wondering what the BGFV short squeeze will be like.
hmm interesting post from a long time investor like you. thanks for your words. I hope momentum (upward) doesn’t stop tmrw!
Insightful! Love your writing!
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