PLCE is the new GME and Mithaq Capital is the new Ryan Cohen

The Children's Place, Inc. (PLCE) is another retail stock like BBBY or GME that shorts are betting will falter. It looked that way a few days ago when the stock dropped under $9.00 after a poor quarter. However, what has since followed has set up the stock to become an epic short squeeze not seen since GME. 

Saudi Arabian firm Mithaq Capital has been buying up PLCE shares at a ridiculous pace, having bought up 6,751,387 shares from February 9th to February 13th as disclosed in several Form 3 and Form 4 SEC filings starting on the 13th. This represents of 54% of all shares outstanding and since this is only up to the 13th, that means the firm could have purchased more shares since then. 

This is not some joke like Cohen's BBBY disaster. Mithaq is in the process of taking over Aimia Inc. (AIMFF), but the ferocity of buying on PLCE makes that deal looks like child's play. It has spent nearly $100 million on PLCE shares in three trading days, and counting. Mithaq plans to nominate 11 people to PLCE's Board of Directors and will be assisting with funding the company's liquidity needs. 

PLCE has 12.5 million shares outstanding and an 11.2 million float. The means there are only around 4.4 million shares in the float left when accounting for the Mithaq shares. The last reported short number was 2.1 million, and there is a good chance that based on the price action and financials, that number is higher. Shorts were initially in the black but are now deep in the red. Imagine if Mithaq keeps buying to the point that it owns over 100% of the float? With all of those shares fully and legally filed. This is the closest we have ever been to shorts and synthetic shorts actually being exposed. Yet the meme stock crowd is fairly silent on it. Imagine what will happen when that silence is broken. 

The reason behind Mithaq's sudden interest in PLCE is confusing. Perhaps it saw an opportunity to create an epic short squeeze and profit from it? Saudis have been known to throw their money around for clout and maybe this is one of those times. 

Another consideration is that there is a ton of open interest on deep in-the-money call options expiring tomorrow. A combined 4,373 call options at strikes $20 or below and an additional 2,908 at strikes between $21 to $26. This represents 728,000 shares worth of call options. This chart shows the potential of the squeeze:

This doesn't include the ITM calls for March, which are 6,666, representing another 666,000 shares. Assuming Mithaq hasn't purchased more shares since the 13th and assuming the lockup of in the money call options, there is only a 3.7 million float remaining. Short interest would be 57%. If Mithaq has purchased more shares, these numbers will look even more extreme. Short % increases to 100% or above if Mithaq purchased at least 1.6 million more shares on the 14th and 15th. PLCE has massive short squeeze and is backed by a firm willing to support it. All it needs is the attention of the meme stock traders and it will take off.