Boxed Stock Rallied 58% Premarket. Is This a Dead Cat Bounce?

The Boxed Inc (NYSE: BOXD) stock price rallied 58% premarket as investors bought the company’s stock despite the lack of new announcements. Given today's rally's lack of fundamental triggers, it is fair to question whether the move could be a dead cat bounce.

For those unfamiliar with the term ‘dead cat bounce’, it refers to a rally by a stock or asset whose price is still doomed regardless of what happens over the short term. For example, a company headed straight for bankruptcy could still rally hours before it goes under, which is why such a rally is called a dead cat bounce; the firm was still dead despite the rally.

Another possibility could be a short squeeze by retail traders keen to punish institutional and professional traders who habitually short the stocks of companies on the verge of bankruptcy. There is a significant likelihood that Boxed stock is currently being short squeezed by retail traders, given that over 5.92 million BOXD shares had changed hands at the time of writing. 

The last announcement from Boxed Inc was on March 15, 2023, when it told investors that it held all its cash at Silicon Valley Bank and it was now safe after the Fed bailout. The company also revealed that it had awarded its key executives lump sum payments worth 33.33% of each individual's annual base salary.

Investors did not react well to the news as Boxed shares fell 49%, given that the company still faced the possibility of filing for bankruptcy since it was yet to implement the Forbearance Agreement signed between it and its lenders since it could not prepay the $5 million stipulated in the agreement. 

The online and mobile wholesale retailer’s future looks bleak, so today’s rally is either a short squeeze or a dead cat bounce since the company’s situation has not changed since last week. 

The NYSE suspended trading in Boxed warrants (BOXD WS) over the weekend and commenced delisting procedures. Boxed shares are also at risk of being delisted. I would avoid the company’s shares as a value investor. 

*This is not investment advice. 

The Boxed stock price. 

The Boxed stock price had risen 58.02% premarket to trade at $0.1596, rising from Friday’s closing price of $0.1010.