Trupanion is the New GameStop: Partners With Chewy, Heavy Short Squeeze Potential

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Earlier today I talked about Trupanion, Inc. (TRUP).  At the time the stock was around $142. It ended the day up 39% to $155.41. TRUP announced it's teaming up with Chewy, Inc. (CHWY) to offer pet insurance to Chewy's base. If you recall, CHWY founder Ryan Cohen was the one who joined GameStop (GME) to initiate a turnaround plan, causing the famous short squeeze to over $400. 

TRUP has about about 4 million shares short on a float of 31 million shares and total shares outstanding of 40 million. So it doesn't have as high of a short interest as other stocks known for their short squeeze potential. Though TRUP's short interest % of float of about 13% is comparable to GME's today. What makes TRUP such a strong short squeeze candidate becomes apparent when looking at the NASDAQ short interest history:





















Short interest has been steadily rising since the stock was around $80 in April. When it pulled back to that mark in September, shorts should have been smart and covered. But instead they shorted even more. The key here is the days to cover. The short interest of 4 million shares is 10 times greater than the daily average volume. Even today with the stock moving up $43, the volume was only 2.6 million. It doesn't take much to move this stock, and shorts are in desperate shape, facing a margin at nearly a 100% loss since $80. 

Looking at Ortex data, not a lot of today's 2.6 million in volume was short covering:











Only a net 51,700 shares covered, so the majority of the 4 million shorts remain outstanding. Cost to borrow is still under 1% as utilization rate is still under 10%. So from a CTB perspective, holding a short is not too costly. The issue for existing shorts that will cause a squeeze is if the stock continues upwards, they will get a margin call or will otherwise have to close the position if it becomes to risky. 

TRUP, with the good news today, association with Chewy founder Ryan Cohen, and heavy short interest is a prime candidate for a squeeze of its own, possibly over $200 very soon. 

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