The market is sleeping on this one.
Pitney Bowes is primed for a massive turnaround with potential to sky rocket in the short term and triple in value over the next 2 years.
I’m betting on them with shares, short term options, and long term options.
Most of this was put together by other people, I’m just consolidating it all down into one writeup.
Let’s dive into it.
Last Thursday, PBI held their best earnings call in recent history. They announced they are selling their global ecommerce center, which was basically just a massive cash-hole. Estimates going into it put the cost of exiting this nightmare over $300 million.
They came in with estimates under 150 million, putting projected earnings per share around $1.50, which with moderate estimates puts the stock over $13 next year.
For years this company was being run into the group by completely incompetent management. Hestia Capital recently took the board over and has been running the ship for the past year. Since they have taken over, the company is no longer hemorrhaging cash.
Free Cash Flow: $83 million, an improvement of $94 million year-over-year.
That’s the long term play.
The short term play is a spike in short interest and trade settlement delay.
They popped 30% on earnings, only to come back down 20% and close the day up only 10%. This was to keep weekly options out of the money on Friday.
$PBI expecting price to move up over next 2-3 days. Strong correlation of off exchange spikes resulting in upward price action in the days following. They used trade settlement delay to keep those $7 Calls from being ITM. Nothing malicious, but shorts were betting wind down costs of Global Ecommerce would be over 300 million, and they were wrong. It was cheaper for them to apply downward pressure Friday. It is not anymore.
$PBI is in a unique position with significant potential for both a gamma squeeze and a short squeeze. Let’s explore why this stock could see dramatic price action soon.
$PBI has substantial open interest in call options at $5-$7 strikes, with 114,746 contracts representing potential demand for 11.47M shares. As the stock trades near $6.29, these options could move ITM, forcing dealers to buy shares, creating upward pressure.
Adding fuel to the fire, $PBI’s short volume ratio hit 61.87% recently, with short int spiking to 12.03M shares. High short volumes indicate significant bearish sentiment, but they also increase the risk of a short squeeze if the stock price starts rising.
The off-exchange volume has been substantial, indicating hidden trading activity that could lead to sudden moves. If $PBI’s price moves into the $5-$7 range, both shorts covering and dealers hedging could trigger a massive buying spree.
In summary, $PBI is positioned for potential volatility due to:
High open interest in key call strikes
Elevated short interest and volume
Significant off-exchange trading activity These factors could combine to create a powerful upward move.
As we monitor $PBI, the interplay between these forces could lead to a self-reinforcing cycle of buying. If the stock begins to rally, the need for hedging and short covering could amplify the price movement. Stay alert for possible action.
In short, $PBI’s current setup is a textbook case of how options and short interest can interact to drive extreme price movements. Keep an eye on the charts and be prepared for potential shifts. This one could be explosive.
This situation doesn’t necessarily mean there’s a malicious short at play. It could be automated strategies reacting to $PBI’s improving but complex balance sheet, heavy debt, and PBI bank debt liability misconceptions. This setup is ripe for volatility.