An American Airlines Airbus A321-200 aircraft takes off at Los Angeles International Airport (LAX) in Los Angeles, California.
Mike Blake | Reuters
American Airlines Shares rose more than 14% on Thursday after posting less-than-expected loss and higher sales than analysts forecast.
Analysts were quick to say the move was not based on the state of American business. The carrier and its competitors are struggling to gain a foothold in the coronavirus pandemic. Americans booked Record annual loss of $ 8.9 billion.
These stocks have surfaced on the Wallstreetbets Reddit chat room, which is home to a wave of traders bought sharply shortened stocks, Sending stocks that skyrocket and crowd out short sales by hedge funds. Short positions are bets that stocks will fall when an investor or trader sells a stock with an agreement to buy it later when they think the price will fall and they can pocket the profits.
Short’s percentage of American Airlines stock far exceeds that of its competitors. Short interest in American was 25% of the company’s float, compared to 14% of the float, according to FactSet Spirit Airlines‘and about 5% of United Airlines‘.
“We don’t think the move is fundamentally driven as the outlook for Americans is similar to what we’ve heard in this earnings cycle,” said Helane Becker, an analyst for Cowen & Co. airline. “We believe the move was due to risk reduction in the marketplace and American remains one of the most consensual short airlines in our coverage universe.”
She said Americans could take advantage of this rally to offer stocks. Americans’ profits in premarket trading had exceeded 80% at one point during premarket trading.
-CNBC’s Yun Li contributed to this report.