ZAPP up 55%: turnaround or short squeeze?

ZAPP Electric Vehicles Group Ltd. (ZAPP) is up over 55% today. The stock has gained a massive 200% in one month. But what lies behind this meteoric rise? A business turnaround or a short squeeze? Let's find out.

ZAPP stock's short interest stood at 59% as per the latest data. Such a high short interest is enough to drive up any stock on the smallest of positive news. But what has triggered the upside in ZAPP today?

Last month, the company signed a distribution contract in India that caused the shares to spike over 200% in a single day. The hype died down in the days that followed, but not after giving the shorts a couple sleepless nights.

On June 20th, the company announced its 1HFY2024 results. The financials showed marked improvement despite reporting loss.

The net loss of $5 million was an improvement on the $8.6 million loss in the same period last year. The operating loss of $3.1 million was also an improvement on the $3.9 million SPLY.

This triggered an upside that seemed to have settled down again a week later. Like any other short squeeze, this seemed to come in waves settling down in the subsequent days.

It is said that lightning doesn't strike twice. On ZAPP shorts, it did.

As if that wasn't enough, it now seems to have struck again.

The shares went up as much as 70% today at market open and then seemed to have settled around the 55% mark.

On a fundamental level, despite better financial results that seem to be fanning the flames, the company doesn't look that healthy when you look deeper.

Period	2023	2022	2021
Total Assets	7.34	296.18	293.12
Total Liabilities	25.78	16.17	11.4
Equity	-18.44	280.01	281.73

The company is running on negative equity and it will take more than a few good MoUs to dig the company out of the hole. As long as it owes more than it makes, the financials won't improve much. But that's a problem for the investors. For now, the focus is certainly on the short squeeze.

Today's volumes have already reached 38.6 million and we haven't even reached the first hour mark. Just for context, this is over 1000% times the 65 day average volume of the stock.

The squeeze is on and the shorts are trapped. It will be interesting to see how they survive this squeeze.