Chewy Inc (NYSE:CHWY) shares are surging Thursday after the company reported strong first-quarter results, but Jim Cramer believes there's another reason the stock is on the move.
What To Know: Cramer highlighted the high short interest in the e-commerce pet care retailer's stock Thursday on CNBC's "Squawk On The Street."
"It's kind of a bit of a short squeeze. It could last a while," Cramer said.
That's because the stock has fallen so far from its pandemic highs. Chewy shares traded up to around $120 last year before reversing course. The stock is down more than 53% just this year.
"It is part of that whole ilk of companies that people got very excited about. They used Chewy. They saw a lot of boxes on the street, Chewy, so then they bought the stock," Cramer said.
Now the stock is being propped up by shorts, Cramer said: "People were betting on a big shortfall. They didn't get it."
35.49% of Chewy's float is currently sold short, according to data from Benzinga Pro.
From Last Year: GameStop Chairman Ryan Cohen Says Government Crackdowns On Short Sellers Would Be A Good Use Of Taxpayer Money
Why It Matters: Last year, retail traders came together on social media platforms in an effort to squeeze shares of GameStop Corp (NYSE:GME) higher after noticing extremely high short interest in the name — and it worked. GameStop went from a single-digit stock to several hundred dollars per share in just a matter of weeks.
Chewy co-founder Ryan Cohen joined GameStop's board last year and owns an 11.9% stake in the company after increasing his investment this year.
It wouldn't be surprising to see a similar group of retail traders target Chewy for a short squeeze, given the high short interest highlighted by Cramer on Thursday.
CHWY Price Action: Chewy shares have traded between $22.22 and $97.74 over a 52-week period.
The stock was up 20% at $28.31 at time of publication.
