Highly shorted Nikola jumps as retail army scoops up shares after BayoTech deal

(Reuters) – Shares of Nikola Corp jumped 14% on Friday, a day after a short squeeze sent the electric-truck maker’s shares soaring in their busiest trading session on record.

The stock surged nearly 61% to a more than four-month high on Thursday after Nikola entered a deal to sell 50 EVs to BayoTech and purchase low-carbon hydrogen from the firm.

The short squeeze in Nikola, after short sellers rushed to exit bearish bets due to a rise in the stock’s price, led to a record 317 million shares traded on Thursday.

Last week, Nikola reported a sequential jump in EV sales in the second quarter, a positive sign for the startup that has been grappling with a cash crunch and stiff competition.

Nikola was also the most traded stock among retail traders after Tesla (NASDAQ:) in the previous session, according to J.P.Morgan tracker, indicating continuation of the strong interest in EV stocks from individual investors.

“We expect the more aggressive retail punters to add wagers in out-of-the-money call options in EV companies and other high-beta retail favorites during this reporting season,” Lucas Mantle, analyst at Vanda (NASDAQ:) Research, wrote in a note.

For the week, Nikola shares have surged 57%. Among other EV companies, large purchases of out-of-the-money call options for Rivian helped the stock’s record 48% surge last week.

About 22.7% of Nikola shares were in short position on July 12, according to analytics firm Ortex.

“The recent price increase in Nikola looks very likely to have been accelerated by short sellers closing some of their positions and adding more buy pressure on the stock,” said Peter Hillerberg, co-founder at Ortex.