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In some ways, Tupperware Brands Corp.’s record one-day surge Monday on no apparent news appeared out of left field, but perhaps it shouldn’t have been so surprising.
In the past month, stocks including Carvana Co.
CVNA,
Upstart Holdings Inc.
UPST,
Coinbase Global Inc.
COIN,
Plug Power Inc.
PLUG,
MicroStrategy Inc.
MSTR,
Nikola Corp.
NKLA,
Groupon Inc.
GRPN,
and WW International Inc.
WW,
have gotten swept up in what one trader said was factor rotation, and Tupperware appears to have joined that club.
Tupperware also has a high short interest, estimated at around 23%, with a relatively low float, according to Samantha LaDuc, founder of LaDucTrading.com. When this is combined with a momentum factor rotation — where the spread between crowded longs and crowded shorts is very wide and starts to close — you get heavily shorted issues spiking higher, according to LaDuc, who said that she was able to “well-time” her Tupperware
TUP,
trades for clients Friday.
Tupperware shares surged 35.3% Friday before soaring another 75.6% Monday to record their biggest one-day percentage gain on record.
LaDuc said she was able to anticipate the stock spike despite a dearth of traditional market-moving news around the name.
“While the S&P 500 wasn’t moving very much over the past month, I spied a continued rotation under the surface in oversold, left-for-dead ‘value’ plays,” she told MarketWatch via email. “Tupperware fit that bill perfectly.”
Back in April, Tupperware issued a going-concern warning, essentially cautioning that it could go bust. Fast forward to Monday and the stock spiked on no news “other than that hedge funds have been covering their very profitable ‘dash-for-trash’ plays short as their V.I.P. longs of mega-cap tech soften and fall,” the trader said.
Related: Tupperware’s stock sees largest daily gain on record amid meme-like surge
LaDuc explained that this is known as factor rotation, and she has traded it many times over the years.
Related: Tupperware’s stock pulls back after record rally exhibits meme-like flashes
Stocktwits, a social platform for investors and traders, told MarketWatch that since Friday, there’s been a major uptick in activity on the platform’s Tupperware stream. The number of people who have the stock on their watchlist has grown by 20%, according to Tom Bruni, senior writer at Stocktwits, with message volume “exponentially higher” Tuesday than it has been over the last year.
The last time he saw an uptick like this was when Tupperware issued its bankruptcy warning in April and shares tumbled nearly 50% in a day.
Still, message volume on Monday was about 500% higher than the highest day during the April period, according to Stocktwits. “Clearly there’s a renewed interest from old observers and new interest in the stock emerging during this recent short squeeze,” Bruni said.
Despite Monday’s big gains, Tupperware’s stock has fallen 67.9% so far this year, compared with the S&P 500 index’s
SPX,
gain of 19%.
Related: Tupperware’s stock tanks more than 10% after waiver agreement, payment warning
In its preliminary full-year results, reported in March, Tupperware sported an 18% sales decline compared with the prior year. Back then, Tupperware Chief Financial Officer Mariela Matute said in a statement that 2023 was expected to be a transition year for the company as it worked to stabilize its business and get on better financial footing.
In April, when it issued its going-concern warning, Tupperware also announced the hiring of financial advisers to help it navigate its near-term challenges.
In a filing earlier this month, Tupperware said that it had entered a waiver agreement with some of its creditors but warned it may not have money for an interest payment this month.
Emily Bary and Claudia Assis contributed.
