Why Appian shares soared 52% in June
Actions of Appian (NASDAQ: APPN) jumped 52% in June, according to data from S&P Global Market Intelligence, although there hasn’t been any significant news on the low-code cloud software maker. Instead, the stock appeared to benefit from positive analyst chatter and what appeared to be a short squeeze as investors pushed a number of stocks even higher.
The chart below shows that the stock gained steadily over the month.
Although Appian hasn’t caught the direct attention of the Wall Street Bets crowd, known for inflating stocks like AMC Entertainment and GameStop, it received short cuts at the same time, both at the start of the year and again in June.
The rally began on June 8 when the stock jumped 18.1% to high volume even though there was no stock news. The stock rebounded again on June 17, gaining 11.3% after research firm Hedgeye issued a bullish note on the stock, saying it has the ability to triple product demand and should become the first low-code software company. Appian shares continued to climb for the remainder of the month, helped by a rising tide of growth and tech stocks.
As of mid-June, 17% of Appian shares were sold short. It’s not a huge percentage, but it’s enough to make short sellers susceptible to one-day pops, especially after the stock has skyrocketed over a three-month period that began with its report. on the results last November. Stocks more than tripled during this time, but then returned most of those gains.
Appian appears to be a promising growth candidate as low-code technology, which allows businesses to easily deploy applications without needing to write code, appears to have reached a tipping point during the pandemic. Management also forecast revenue growth of 39% to 40% in its cloud subscription segment for the second quarter of 2021, which would be its fastest growth in history.
While the stock is expensive and trades at a price-to-sell ratio above 30, the series of short cutbacks should help investors feel confident that any pullback in the stock will be limited.
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