This puts the # of days to cover at 16.8. Here is the information I learned from ChatGPT:
The "days to cover" metric, also known as the short interest ratio, indicates how many days it would take for all short sellers to repurchase borrowed shares, given the stock's average daily trading volume. This ratio is calculated by dividing the total number of shares sold short by the stock's average daily trading volume.
In the biotechnology sector, the days to cover can vary significantly among individual stocks, influenced by factors such as company size, trading volume, and market sentiment. For instance, as of November 2024, BioNTech (BNTX) had a short interest ratio of 2.5 days, which is generally considered an acceptable level. Conversely, Purple Biotech (PPBT) had a short interest ratio of 0.8 days during the same period.
While specific average days to cover for the entire biotech sector aren't readily available, it's important to note that a higher days to cover ratio may indicate potential for a short squeeze, where short sellers are forced to buy back shares rapidly, potentially driving up the stock price. Investors should assess the days to cover ratio in conjunction with other factors, such as overall short interest and trading volume, to gauge market sentiment and potential stock volatility.
So I followed up, noting that this is a binary stock. Response:
For biotech stocks that are considered "binary," meaning their performance is heavily or solely dependent on the success or failure of a single product (like a drug awaiting FDA approval), the days to cover can be notably high and volatile. Here’s why this is the case:
1. **High Short Interest**: Single-product biotech stocks are often highly speculative, attracting both bullish and bearish sentiment. Investors who bet against these stocks may be anticipating regulatory delays, poor clinical trial results, or eventual approval failure. This speculation tends to increase the number of shares sold short.
2. **Lower Average Volume**: Binary biotech stocks might not be widely traded daily, especially if they’re smaller or in clinical stages without revenue. A lower average volume increases the days to cover because it would take longer for short sellers to buy back shares at this lower volume.
3. **Catalyst-Driven Volatility**: Since binary stocks depend on the outcome of key events (like clinical trial results or FDA decisions), short sellers may face sharp increases in days to cover when major announcements approach. Many investors avoid shorting right before an announcement, as the stock price could move dramatically if the product is approved, potentially causing a short squeeze.
4. **Examples and Ranges**: While typical biotech companies may have days to cover ranging from 1 to 5 days, binary biotech stocks can reach well beyond 5 days due to their higher risk and lower liquidity. It’s not unusual for some binary stocks to have days to cover in the 10-20 day range or more, depending on market interest and trading patterns.
Because of these factors, days to cover in single-product biotech stocks require careful analysis, as they’re not only indicative of short interest but also signal how quickly sentiment can change around a high-stakes event.
Which makes me feel like the short interest is not really relevant information for SAVA these days. It is either going to hit or sink, imho. Very hard not to add to my small position, but....
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