Aterian Inc. - The Potential Squeeze of the Year (2022)

My Position

Shares - 892 Shares @ $5.40 average ($4,813.86 Total Invested)

Options - 4/29 OTM $10c x 10, 5/6 OTM $7.5c x 1, 5/6 ITM $4c x 1 (12 options total)

I first bought into ATER (options only, first shares bought on 4/11) on April 5th, 2022 because I read some Due Diligence (DD) on a subreddit that I joined sometime last year, called r/Shortsqueeze.

**Sidenote: If you find yourself interested in investing in ATER don't use r/Shortsqueeze, use r/ATERstock, you'll find consistently better DD write-ups, more focused investors, and a strong community support for the stock.

The DD I read was by fellow reddit user u/anonfthehfs. This is the exact post I initially read if you'd like to read it. After reading the DD, I checked out u/anonfthehfs account on Reddit and came to find out that he's been tracking and writing about ATER for months and sharing his DD in various subreddits for others to read. This guy was clearly convicted to peeling back the curtains and exposing the criminal activity taking place in ATER stock. If only the SEC had 1/10th the level of conviction he and many other retail traders have, maybe injustices like this one would actually be addressed and halted. Naturally, I fell into the rabbit hole, essentially reading about the battle between Aterian Inc. and retail traders vs. Hedge Funds (HFs) and naked shorting. 

I never got the opportunity to jump into GME and I regrettably never took the opportunity to be apart of AMC's short squeeze because I was skeptical. So when I saw how similar the set-up was between ATER and these previous Mother of All Squeezes, I decided not only to take the opportunity, but admittedly FOMO into it. I wasn't going to miss another opportunity to make life-changing gains and cause massive pain to these greedy Hedge Funds (HFs), Market Makers (MM), etc. that consistently employ illegal tactics to rig the system in their favor.

What did I see that caused me to FOMO in?

 This is the Ortex data from the first u/anonfthehfs post that I read on 4/4/22.

Before I give you my reasons for FOMOing, for the newer investors let me use some excerpts from Investopedia.com to help you understand what a stock's float is, how it is calculated, what a short float is, and what generally constitutes a high short float percentage.

Float

"Float refers to the regular shares a company has issued to the public that are available for investors to trade."

How Is Float Percentage Calculated?

"The percentage of shares shorted compared to the float is referred to as the short interest. To calculate the float percentage for a stock, divide the number of shorted shares by the number of shares available for trade."

Short Float

"A short float is the number of shares short-sellers have borrowed from the float."

High Short Float General Rule of Thumb

"Investors will often disagree about how high of a short float should be considered “high.” However, there are some general rules of thumb that most investors abide by: Short interest as a percentage of float above 10% is relatively high, and it could indicate significant pessimistic sentiment; short interest as a percentage of float above 20% is usually considered very high." 

All of these terms and questions related to Stock Shorting can be answered here on Investopedia.com. None of these excerpts are mine, they are all from Investopedia.com.

REASONS I FOMO'd on 4/4/22

JUST LOOKING AT THE STOCK.

  • ATER's float is 26.27 Million. That means only 26 Million shares are available to the public for trading, which is low.
  • High Insider Ownership percentage at 10.43%. Now this is 10.43% of the Shares Outstanding, not float. Shares outstanding is the total number of shares a company has, including shares available and not available to the public. The company itself holds 6.48 Million Shares of the 62.09M Total Shares. That (to me) is a strong indicator of the company's own belief in its current and future abilities and outlook, which is bullish.
  • A high percentage of analyst have a BUY rating for Aterian Inc. Not that analysts opinion means all that much to myself, but it is still bullish and helps increase interest in the stock for less informed investors.  
  • Revenue has been increasing quarter-over-quarter.
  • Aterian has beat earnings, 3 of the last 4 quarters.
  • Stock squeezed last year from $3.12 on August 20th, 2021 to $17.98 on September 13, 2021. That is about a 5.5x gain or for those percentage folks, ~ 550% gain. That means if you had bought just 350 shares at $3.12 and sold at the peak, you would have profited $5,201 in 3 weeks. Crazy right!

LOOKING AT THE ORTEX DATA

  • As you can see the Current SI% of FF (current short interest percentage of the free float) 34.7% which is as you now know, is very high (I'll save the word extremely for the most current Ortex data I will show you).
  • If you look off to the top left of the Ortex data you'll see that the % Change in Short Interest increased 14.32% compared to the previous day.
  • The Estimated Short Interest % of FF increased by 53.37% (holy shit, that's was an eye-popping number) from the previous day.
  • Utilization at 100% since March 8th!
  • CTB, otherwise known as Cost to Borrow, ATER shares was at an average of 18.83%.
  • Days to Cover was at essentially 4, which is beneficial in a short squeeze scenario. The more days-to-cover, the better, although this metric is heavily affected by volume so if you have high volume, like we do know in comparison to April 4th, that number will decrease significantly.
  • Volume has increased a lot as you can see by the blue bar down at the bottom. In a short squeeze scenario, you want volume, specifically high volume from traders buying. If you look at the Ortex data, you'll see where the squeeze happened last year in September. Volume was insane compared to every other trading period, except for now, as we start to see that blue bar hovering near last years squeeze levels.

Why this could be the Squeeze of the Year?

Image above taken from Reddit, subreddit r/ATERstock, user u/lxOxOxOxl.

LOOKING AT THE STOCK

All the things I mentioned previously about the stock are still there. Except this time, I am very confident that retail owns a very large percentage of the float and interest in ATER has grown significantly from 3 weeks ago. I mean, as far as interest goes, just look at me. I'm relative new to this stock, and very new if you compare me to other retail traders like u/anonfthehfs on the r/ATERstock subreddit. Retail traders are starting to slowly understand the data and crimes HFs and MMs commit in the market place and make a stand.

LOOKING AT THE ORTEX DATA

Image above taken from Reddit, subreddit r/ATERstock, user u/lxOxOxOxl.

  •  As you can see, Short Interest % of FF has increased from 34.34% on 4/4 to 41.69% as of 4/22.
  • Utilization is still 100%! Has been since March 8th. 
  • The average CTB has increased from 18.83% on 4/4 to 260.01% as 4/22.
  • Volume is rampent! Blue bar on the bottom.
  • Shares on Loan increased from 11.51M on 4/4 to 18.54M as of 4/22. HFs just keep some how (criminal activity, naked shorting) magically coming up with more and more shares of ATER to short. They are mainly doing this to control the price (drive it down) and shake out weaker-willed retail traders. Obviously, to continually increase their short position to control price action, they aren't learning that most ATER retail traders are strong-willed and have something called "Diamond Hands". They can continue to dig their own graves though and set us up for one sweet short squeeze a.k.a the Short Squeeze of the Year.
  • Just from Friday alone (4/22/22), they increased their shares borrowed by 1.26 million. 🤡s!
  • Aterian Inc. is on the Reg Sho List. Check it out here for yourself! Click here.
  • FTD's or Failure-to-Delivers will be coming due in mass! This could start the squeeze of the year.

CLOSING REMARKS

Visit r/ATERstock for waayy more thorough analysis of Aterian Inc by other retail investors.

For all the reasons mentioned, I am heavily invested in ATER. I plan to buy an additional $2,500 worth of shares and $1,500 of ITM options and $1500 OTM options once my $5k transfer comes in on Wednesday, pending the squeeze hasn't occured yet. It is important that I mention that shares and ITM options create a better chance of causing a squeeze (in a short squeeze scenario), not OTM, but that is not me suggesting how you should invest it is simply a fact. As you can see, I am investing with my own strategy that is in accordance with my own risk tolerance level. I will post an update to my position here, whenever I increase it.

I am excited to see Shorts and HFs get burned and am looking forward to the next couple weeks! Good luck to all that are or choose to invest in ATER. While my point of view is very biased in my write-up, the information presented was not. Data is just that, data. While the squeeze may never come to fruition, the data presents a story that a squeeze is very likely, but of course you must make that determination yourself.

I am not a financial advisor, seek financial advice from a pro. I am just an enlisted Navy sailor, who likes investing, and has a blog that I write in when I get the opportunity. I also just like ATER.

Meme above posted by u/MutedReplacement815 in r/ATERstock.

Update to Position (4/30/22)

Shares: 2100 Shares (average is difficult as these shares are owned across multiple brokerage accounts probably somewhere around ~$4.20ish)

Options: 1x ITM $4c (5/6), 15x OTM $5.5c (5/20), 10x OTM $22.5c (5/20) 

Update to Position (5/6/22)

Shares: 2200 Shares (between two brokerages).

Options: 100x OTM $22.5c (5/20) and 15x OTM $7c (6/10)

As you can see, I have a strong inclination that ATER will begin its squeeze somewhere between 5/20 and 6/10. This isn't based on a hunch but rather the options chain for 5/20 and the upcoming Executive Order on June 3rd. If I do add to my options from here on out, it will be to increase my exposure to the 6/10 $7 Calls, since I think the Executive Order on Friday, June 3rd will be the main catalyst of the squeeze.

Risk: My 6/10 $7c has a max risk of $750 since I purchased the calls for $0.5/c or $50 each. Upside is unlimited.

My 05/20 $22.5c has a max risk of $455 since I purchased the calls for an average of $0.0455/c or $4.55 each. Upside is unlimited.

Overall, I'm at risk of losing $1205 if both expire worthless. Compare this to the maximum upside potential, which is unlimited, and I feel like the risk (for myself) is worth the reward based on all the data that supports a late May/early June squeeze.

 

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