Hirama/Getty Images
- SmileDirectClub stock is on track for three days of gains thanks to retail-trader hype.
- Day traders want to squeeze shorts betting against the Nashville, Tennessee-based company.
- The stock rallied 15% on Wednesday alone.
- See more stories on Insider's business page.
SmileDirectClub stock has soared 33% in the last three days as retail traders on Reddit investing threads hype its short-squeeze opportunity.
The orthodontics company has been among the top discussed stocks on Reddit's Wall Street Bets this week as retail traders pushed the idea of a short squeeze, according to Quiver Quantitative and HypeEquity data.
Shares surged 15% on Wednesday alone and continued to rally early Thursday, trading up 1% at $6.83 at 8:52 a.m. in New York. Even with this week's rally, SmileDirectClub stock remains below its Jan. 27 high of $14.99.
The Nashville, Tennessee-based company has a 34% short interest rate with less than two days to cover, Fintel.io data show. Retail traders have been known to target companies with high short-interest rates in an effort to hurt, or "squeeze," investors who bet against the stock.
The first such example was GameStop in January, which had more than 100% of its floating shares shorted at one point, Reuters reported. Reddit retail traders called the epic runup in the share price the "mother of all short squeezes."
Short sellers have begun to pull back from betting against mid-size companies, though, as retail traders have tended to target those for a price surge. Now, fewer and fewer small- to mid-size companies have high short-interest rates, a June report from Barclays showed.
But some - like Camber Energy, which surged and then dropped this week amid a standoff between retail traders and short sellers - are becoming meme stocks thanks to their high short interest.
SmileDirectClub is the latest example. The company, which went public in 2019, helps customers align their teeth through an at-home process that SmileDirectClub boasts is a fraction of the price of competitors like Invisalign.