Workplace experience platform CXApp (NASDAQ:CXAI) — which offers various analytics and application technologies via a Software-as-a-Solution (SaaS) business model — saw its shares soar on Monday. Earlier this morning, the software specialist announced a partnership with Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). Specifically, it signed a strategic partnership and development agreement with Google Cloud. In addition, CXAI stock may be benefiting from a short squeeze.
According to the company’s press release, Google is partnering with CXApp in developing a generative artificial intelligence (AI) platform. The central directive is to provide a full-stack solution that allows employees the ability to engage all their work tools via a single application. Through innovations such as a simplified user interface, natural language processing inputs and digital assistants, the solution should boost productivity.
In addition, Google and its service partners “will provide advanced services including end-to-end security, analytics and monitoring as well as usage-based SaaS performance enhancements.” This service should help create the best-in-class cloud-mobile experience for CXApp’s clients.
Per the release, the launch of this generative AI platform should occur this summer. However, this target period is subject to a successful testing and validation process with a major new client.
CXAI Stock Is on a Short-Squeeze Watch
With the potentially game-changing announcement, CXAI stock initially popped 160% before settling to around 150% during the afternoon session. Since the beginning of the year, shares gained nearly 391%.
What’s also potentially moving shares higher is a bearish spotlight on CXAI stock. According to Fintel, its short interest stands at 14.17% of its float. Further, at a leading prime brokerage, the number of shares available sits at only 100. To be clear, that’s not the total number of shares available for shorting. Nevertheless, it provides a signal regarding its pessimistic profile.
Ordinarily, such a profile would be considered a negative against an affected enterprise. However, with CXAI stock shooting higher, the dynamic creates a positive feedback loop. That’s because to initiate a short position, a speculator must first borrow the target security. Upon selling the shares, the idea is to wait for the price to drop, returning the borrowed stock while pocketing the difference as profit.
However, if the target security rises in value, then the bearish speculator would have to buy back shares at a higher price, thus forcing a loss. Plus, the very act of buying a stock is obviously bullish. That’s why short squeezes are dangerous for bears — but incredibly compelling for bulls.
Why It Matters
Currently, no one is covering CXAI stock. However, on Nov. 16, Maxim Group’s Jack Vander Aarde rated it a “buy” with a $6 price target. Back then, shares traded for around $1.36.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
