The market is ripe with the sound of screaming shorts. You can hear them right through your computer screen. The bears have been rooted out far and wide and blood is in the water.
The Reddit gang got the ball rolling, but there’s plenty more ripe fruit on this tree. So, smart market participants are searching for highly shorted stocks and camping out for the eventual big gains.
We would contend that some of the best opportunities in this theme are actually OTC stocks with promising fundamentals but clearly identifiable records of extremely high shorting activity. One such example is Exxe Group Inc (OTCMKTS:AXXA).
According to OTCshortreport.com, AXXA has seen more than half of all transactions occurring from the short side over the past 10 trading sessions despite the company’s recent revelations of strong results and its substantive expansion into fintech, telehealth, and crypto, three of the highest growth areas in the market.
Data Does Matta
Exxe Group Inc (OTCMKTS:AXXA) most recently reported quarterly earnings, where it generated $8.2M gross revenues in 2Q2021 surpassing the $7.7M record set in 1Q2021. According to the release, compared to the same period last year, 2Q revenue increased 211% from $2,619,576, while net income was $1,249,894 against a $(831,911) loss.
These are nothing short of extraordinary improvements on a year-over-year basis. The company has clearly improved its operating performance, and yet the shorts have been stacking up against it.
While that may be seen as a hurdle under normal conditions, in today’s market, with shorts on the run and a full-blown retail-driven stock bull at the full height of its fever, the tables have turned, and we could see some fireworks here.
Eduard Nazmiev, Ph.D., CEO and President of Exxe Group commented: “I am pleased to report $15.9M revenues in 1H2021 compared to $15.3M booked in AXXA’s entire FY-2020. AXXA reaffirms its $30.8 million FY-2021 revenue target.”
The Low Down
Exxe Group Inc (OTCMKTS:AXXA) is a diversified fintech play. The company recently announced that it is targeting first year revenue generation from 1Myle in excess of $15 million. On November 5, 2020 Vinza Limited, AXXA’s UK financial software services company, was renamed 1Myle Limited.
The new name and revamped corporate vision positions 1Myle for success as an exchange services operator and a focused high frequency arbitrageur. In this role, 1Myle buys and sells alt currencies, including Bitcoin, taking advantage of price differentials.
Nazmiev commented: “AXXA has been focused on building and acquiring financial technologies for several years. Our ability to launch new btc fiat exchange services comes at a time when interest in Bitcoin and non-fiat assets are growing around the world. 1Myle is the crystallization of an effort that will see a massive expansion of AXXA’s capabilities and revenue generation capabilities.”
In other words, the company has been performing well, but it may have much bigger growth ahead as it starts to reap the rewards of its fintech investments, including material exposure to the cryptocurrency space. This accompanies its expansion into the roaring telehealth marketplace.
This is multiple high growth themes wrapped into a single enterprise that’s already booking millions in revenues and growing fast.
The Anatomy of a Squeeze
The fact that AXXA has been so heavily shorted is material in understanding what’s possible here. A short squeeze works because the risk is unlimited to those on the short side. Once you sell what isn’t yours, you have to buy it back to square up.
If you are part of a crowded bet on that side of the market, and it’s hard to find shares to square up, the upside potential can become extreme and unhinged from standard value expectations. We saw it recently in GameStop (GME). Shares needed to cover can become like the last bottle of water in the middle of the desert. The price of that water approaches infinity as the sun rises in the sky.
And yet, the bears are leaning on Exxe Group Inc (OTCMKTS:AXXA) every day. It might be time someone decides to teach them a lesson – the same lesson that was recently taught to Melvin Capital and Maplelane in GME, BB, AMC, GSX, and SLV.