BBBY - Why Is Short Squeeze Fave Weber (WEBR) Stock Soaring Today?

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Weber (NYSE:WEBR) stock is rising today on news of a possible takeover. The company known for producing grills has gained attention as a likely short squeeze candidate. But today it surged after markets opened for a different reason. The company has received a takeover bid from a private equity firm. Seeking Alpha reports that an unnamed firm submitted an offer to take over Weber. While few details have been provided, the outlet notes that the grill maker has hired investment banking advisory firm Centerview to review the offer and evaluate its options. Before noon today, WEBR stock had spiked more than 15%. Since then, it has lost some momentum but remains in the green by almost 5% and looks primed to keep rising.

Many details of the potential deal are still unknown, but let’s take a look at what we do know.

What’s Happening With WEBR Stock

Since making its trading debut in August 2021, WEBR stock has been highly volatile. Like many short squeeze favorites, it is prone to sudden price surges that inevitably lead to crashes just as quickly. While WEBR is down 22% for the past six months, it has been rising fairly steadily since late September. This has been mostly due to short interest, since it hasn’t reported any significant growth catalysts until today.

Now that investors know that an outside firm wants to take Weber over, they may have reason to believe the company can grow. Takeovers from private equity firms will usually make a company more competitive and valuable. Investopedia notes that it can also “saddle it with unsustainable debt, depending on the private equity firm’s skills and objectives.” As of now, little is known about the firm that wants to take over Weber. But until investors learn more about the firm in question, they can assume that it wants to help the company grow. The performance that WEBR stock has given today strongly indicates that markets are reacting positively to the takeover news. While Weber did halt trading briefly this afternoon, it has since resumed and shares have been trending upward.

Since news of the takeover bid broke this afternoon, though, WEBR stock has been receiving considerable attention on social media. Many Twitter (NYSE:TWTR) users have been speculating that it will rise further, comparing it to recent meme stock sensation Bed Bath and Beyond (NASDAQ:BBBY). Experts have also drawn parallels between the two companies in recent months. Given the similarities between the two companies, it’s not hard to see why.

What Comes Next

As InvestorPlace contributor Josh Enomoto reported, WEBR stock carries the type of high short interest that may entice some contrarian investors to pounce on it. In September 2022, he ranked it among short squeeze stocks with the potential to soar.

The reaction to the news from social media suggests that Enomoto’s thesis is playing out. While it isn’t trending on r/WallStreetBets yet, retail traders on Twitter are watching closely. Some are calling for bullish plays on it and citing meme stock potential. While it’s unclear how this will play out, investors should watch carefully for more news of the takeover, which will do much to determine Weber’s future.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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