With one short squeeze coming on the heels of another, investors are in a flurry of activity trying to keep up. High short float stocks like SPRT and BBIG have caught hold and risen to new heights, now the wheel has spun in favor of VPC Impact Acquisition Holdings’ (NASDAQ: VIH). Hitting $11.95 on September 2nd in a 16% increase, VIH appears to be prepping for its next run up. As the 6th most shorted stock on the market, VIH has suddenly become Reddit and FinTwit’s darling and it’s easy to see why.
In January, VIH – a special purpose acquisition company – announced its merger with Bakkt to create a combined company with an enterprise value of approximately $2.1 billion. Bakkt is a unique digital wallet that features crypto trading, loyalty rewards, gift cards, and digital asset transfers. Incorporating loyalty points and rewards programs into its structure, Bakkt aggregates these often overlooked assets “to make sure that you’re never leaving money on the table”. This has a wide range of applications for users who may decide to spend loyalty points as cash or send them to others – potentially converting digital assets into crypto currencies as well.
While Bakkt’s services range in complexity from tracking the money left on gift cards to crypto trading, the application is still relatively new. Formed in 2018, the company promises to unlock over $1.2 trillion in digital assets such as merchant stored value, gaming assets, crypto currencies, and rewards/loyalty points. But Bakkt is also tackling the market’s institutional side with Bakkt Warehouse and Bakkt Bitcoin Futures and Options contracts.
For these reasons, VIH specifically sought out this opportunity to capitalize on Bakkt’s burgeoning potential, saying, “our aim was to identify a high-growth fintech company with competitive differentiation and significant white space”. VPC Impact Acquisition Holdings’ board of directors have unanimously approved the merger which will leave Bakkt as the surviving LLC renamed “Bakkt Opco Holdings, LLC”. Although the shareholders’ “extraordinary general meeting” has not been scheduled, it is expected within the next few weeks.
The fact that VIH is a pre-redemption SPAC highlights this stock’s enormous attraction. Shareholders have a redemption right that will allow them to exit at a floor price of $10 during the redemption period. While in the past only shareholders that voted against the proposed merger had this option, rules have since been changed to allow all SPAC shareholders the right to redeem their shares at the IPO price of $10. Typically the redemption period ends near the date of the shareholder’s meeting.
The stock’s low float of only 20.5 million shares and 34.27% short float makes VIH a tempting investment while accumulation continues to accrue. With volume currently 1,376% greater than average, this stock is likely ready for a short squeeze
FinTwit influencer – @gurgavin – has caused quite the stir sharing the newest short squeeze on the block with their 32.5K followers.
Trading at $10.64 VIH is on an upwards trajectory with its next resistance at 11.21. It’s previous run formed a new support near 10.40 with a secondary support around 10.33. Accumulation had held steady before the sell off and is now making gains. RSI is moving upwards from its current position at 56.30. The MACD indicator is moving upwards after declining and its signal line is continuing upwards with no immediate sign of a crossover.
Should you Buy?
Considering the high short float, low market cap, and the relatively low risk involved in this pre-redemption SPAC, VIH is a strong investment option. The added short squeeze catalyst is likely to rocket VIH far beyond its recent high of $11.95. Reaching a PPS of $15-19 between January and April, VIH has the potential to hit similar highs with the short squeeze pressure and investors’ eagerness to get in before the redemption period begins.
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