July 21 (Reuters) - Shares in Sirius XM Holdings (SIRI.O) were down 10.5% on Friday, erasing some of their dramatic gains in the previous day's session with analysts attributing the volatility to a short squeeze, as well as a rebalance of the Nasdaq 100 (.NDX).
U.S. satellite and online radio company, Sirius XM, which is majority owned by Liberty Media (FWONA.O), last traded at $6.99 after closing up 42% at $7.81 on Thursday for its biggest one-day percentage gain since March 2009.
A short squeeze is when these investors are forced to quickly cover their bets to limit losses if a stock gains ground instead of falling.
"However, the large number of shares held short along with a relatively small float provided fertile ground for a short squeeze as seen on July 20," wrote Macker who estimates a $7.50 fair value for the stock.
Evercore analyst Vijay Jayant said the upcoming rebalance of the Nasdaq 100, of which Sirius is a member, was also a factor for the short squeeze as well as related options trading.
Persons:
Neil Macker, Macker, Vijay Jayant, Jayant, David Joyce, Joyce, Sinéad Carew, Medha Singh, Lance Tupper, Sharon Singleton
Organizations:
Sirius XM Holdings, Nasdaq, Sirius XM, Liberty Media, Atlanta Braves, Sirius, Liberty's, Research Partners, Thomson