Imperial Petroleum (IMPP): US most shorted stock is thriving

Imperial Petroleum (NASDAQ: IMPP) stock price has had a remarkable run in the past few months. The stock, which bottomed at $1.17 in August last year, has risen by more than 174% to $3.22. It is hovering near the YTD high of $3.61. That point was its highest point since June 23rd.

Most shorted US stock

Despite the current IMPP share price bull run, it is the most shorted US stock. Data compiled by MarketWatch shows that its short interest stands at over 4.4 million against a float of over 5.8 million. This means that the company has a short interest of 75.27%, meaning that most investors believe that the stock has more downside. 

Imperial Petroleum stock is highly shorted even though the company had a strong performance in 2023 as its revenue jumped. This trend happened as tanker freight rates continued rising because of the geopolitical issues in Europe and the Middle East. Revenues also jumped because of the addition of tankers in its fleet.

In its most recent results, the company said that its total revenues jumped by 97% in 2023 to over $183 million. Its net profit jumped by $42 million to $71 million. This growth happened even as the company went through a relatively soft final quarter of the year.

IMPP stock price has also jumped for two main reasons. First, the company announced that it would end its highly dilutive programs that have seen its total outstanding shares jump from 318k in 20222 to over 17 million today. The company used these dilutive capital raises to boost its fleet, which is an understandable situation.

As part of this remedy, Imperial Petroleum has announced a plan to repurchase its stock. It has already repurchased over $8.3 million shares in the past few months. It also repurchased 3.2 million of its outstanding warrants.

Most importantly, CEO Mafias has increased his stake in the company to about 35.5%, which is a good thing. In most cases, insider purchases is one of the best bullish signs in the market. Also, analysts believe that the company is trading at a massive discount to its Net Asset Value (NAV).

All this makes it ironic that most investors believe that Imperial Petroleum’s stock should go down since it seems to be in a good place fundamentally. Oil demand is expected to remain high while tanker rates will likely rise amid tensions in Europe and the Middle East. Therefore, the most likely explanation is that investors believe that IMPP will dilute shareholders this year again.

IMPP stock price forecast

IMPP chart by TradingView

Turning to the daily chart, we see that the Imperial Petroleum stock price has done well since August last year. It jumped to a high of $3.60 in January and then pulled back. This was a notable level since it was a few points below the key resistance at $3.89, the highest swing in June 2023. 

The stock has remained above the 50-day and 25-day moving averages. Therefore, its outlook is mildly bullish for now since buyers will attempt to retest the resistance at $3.60. A move above this level will see it jump to the next reference point at $3.90. A drop below the support at $2.96, the neckline of the double-top pattern will be a victory to short-sellers.

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