GOVX Short Squeeze To $100,000: AMC Shareholders Just Need To Buy Two GOVX Shares Each

Back in June, we announced our four top microcap short squeeze picks to try to take down notorious small cap manipulator Sabby Management. They were Alfi, Inc. (ALF), BriaCell Therapeutics Corp. (BCTX) (BCT.V), 1847 Goedeker Inc. (GOED) and GeoVax Labs, Inc. (GOVX). Sabby currently owns 377,000 shares of GOVX according to the latest 13F filings. Wallstreetbets censors DD on microcap stocks so we did our write up here instead. Please read these reports for background on the short squeeze thesis. 

https://wallstreetbetsreddit.blogspot.com/2021/06/the-four-microcap-stocks-to-cause.html

ALF and GOED were the big winners with shorts taking massive losses on both at the time. While BCTX has been up and down, GOVX has been mostly overlooked and the last stock to really have death knock on the shorts' doors. GeoVax Presented COVID-19 Vaccine Data at the European Society of Medicine (ESMED) General Assembly. The GeoVax Vaccine is being developed as a universal vaccine to address evolving SARS-CoV-2 Variants. The stock ended up 33% to $5.71 on Friday, but it was off from its day high of $7.50.

What is most evident of the shameful shorting and manipulation done on GOVX was the fact that it had 104 million shares traded on Friday. On a stock with 6.3 million shares. There is no possible way that a stock should be trading 16.5 times its float in a day without massive manipulation, shorting and synthetic shares going on. 

What is going on?

Very simple. These vulture hedge funds who might own a few hundred thousand shares trade back and forth with each other to explode the volume and control the price. If real buys and sells are occurring at $6.50, Fund A could sell, let's say, 300,000 shares to Fund B at $6.00. Then Fund B could sell those 300,000 shares back to Fund A at $5.75. That will unfairly cut down the price and catch stop losses. 

The other major tool in the hedge funds' corner is GOVX's warrants. Trading publicly under the symbol GOVXW. Warrants are like long term call options. Funds can use them as insurance to short shares freely and aggressively. Why? Because even if the stock price was to go to $100, the funds would not be forced to cover at that price. They would simply execute their warrants and pay the $5 strike price instead. There are 1.9 million warrants outstanding. Assuming the funds own the bulk of these, that gives them free reign to short maybe around 1.5 million shares. On a day with over 100 million shares traded that might seem like nothing. But recall what we said about funds trading back and forth to each other. Fund A could short 1.5 million shares at $6.50. Then the houses trade back and forth to each other to walk the price down to $5.75, driving millions in volume in the meantime. The hedge fund scoundrel then covers. That can happen several times in one day, with the small long position and position held in warrants used as tools to do so. Not with real and honest buy and sell transactions, but with different funds in agreement with each other to walk the price down. 

While the stock traded an insane amount of shares on Friday, the warrants traded a much more reasonable 540,000, a little over one-quarter of the float. It's clear that the funds aren't in a big mood to sell their warrants, and we know why. 

So how do GOVX longs combat this?

Simple. In addition to buying and holding stock, they should buy up the warrants. If the inventory of warrants are bought and held by retail, the funds won't have that insurance against their short and will cover. This is similar to a gamma squeeze theory by using call options. 

So if funds use warrants as insurance to short shares, what incentive do they have to sell? This one is easy, and this is exactly what happened to ALF and ALFIW on the days leading up to its squeeze to over $20. ALFIW has a strike price of $4.57. That means in theory that the warrants should trade no less than $4.57 less than the stock price, otherwise there is arbitrage. For instance, if the stock traded at $10 and the warrants $5, people could sell the stock for $10, buy the warrants for $5, exercise the warrants for $4.57 and take the remaining $0.43 as arbitrage profits. Thing is, this is exactly what happened on ALF right before its squeeze. Read our previous blog posts from June to see our commentary and predictions on this.

In this instance, the funds got desperate. The short squeeze was starting and at that point they are willing to sell their warrants below intrinsic value to take buying pressure off the stock. They know that when doing this, arbitrage seekers will be incentivized to buy the warrants and sell or short the stock. They didn't WANT to sell their warrants, they HAD to in order to try to slow the squeeze. The action may have bought them a couple of days time and instead of covering on ALF at something like $100, they covered in the teens on its way up to $22. 

GOVXW has a strike price of $5. Right now the warrants have decent time value as they trade about a buck higher than their intrinsic value. But if the stock price was to spike to $8, and the warrants were to stay at $3 or less, you know the shorts are in trouble. The easiest solution is to buy up a mix of stock and warrants.

GOVX to $100,000 on a squeeze if each AMC holder buys just $10-$20 worth of GOVX/GOVXW

Four million AMC longs have been dreaming of a short squeeze that can take AMC to $100,000. With GOVX having only 6.3 million shares outstanding and an additional 1.9 million warrants, if each AMC shareholder bought two shares or warrants each, that would take up the entire float and shorts would be forced to cover. Plus they would take down the most despised manipulators of small cap stocks. This is not even a competitive force to AMC shares. Buying two shares or warrants of GOVX or GOVXW will cost less than $20. You can't even buy one AMC share with that money. GOVX could be a true winning lottery ticket if everyone did their part. 

According to Yahoo Finance, GOVX has 275,000 shares short, about 5% of the float. This number isn't very high, but it's also from the end of July. The action on Friday tells us the shares short is a lot higher plus all the synthetic shares shorted from the use of warrants.