Retail investors' darling stock NanoRepro lures short sellers after 4,000% gain

(Reuters) - Fertility testing company turned COVID-19 specialist NanoRepro NN6G.DE, which has been a recent darling of German retail investors, has seen a sudden emergence in short selling activity after a dramatic share price surge.

Shares in the Marburg-based company have climbed around 4,000% at its peak this month from early March last year when it first added a coronavirus test to its portfolio, sparking a boom in its business.

But signs of stock borrowing activity in the German micro-capitalized company emerged for the first time in more than 15 months last week, data from FIS Astec Analytics showed, indicating that some investors were taking a stab at shorting the stock.

Before end-February, there was no trace of borrowing activity, partly due to a low free float, as traders piled into the shares after demand for COVID-19 testing led to a ten-fold rise in its 2020 sales and an explosion of its order book.

According to the latest data from FIS Astec the cost to borrow shares in the little-known firm stood at a high of 17% on Wednesday, ten times the sector average, as loan volumes rose.

On the same day, NanoRepro hit a peak at over 22 euros, giving the company a market capitalisation of over 240 million euros ($285million) compared to just 5 million a year earlier.

Since then, the stock has lost ground and by 1428 GMT on Tuesday, it was set for its worst day in five months, down 18%.

“It falls incredibly quickly. And that doesn’t look like a ‘dip’. Someone selling seldom comes alone. I’m glad I’m out,” said Reddit-user Porsche981Fan on the German-language MauerStrassenWetten forum where NanoRepro became a star.

Despite the fresh fall, NanoRepro is still up nearly 2,500% over the last year, a move that dwarfs rallies seen in highly hyped assets like Bitcoin or Tesla.

Meanwhile, the German government’s plan to pay for all asymptomatic citizens to have a quick COVID-19 test at least once a week looks a further boon to the business NanoRepro newly ventured into.

For a grpahic on NanoRepro, clickhere

($1 = 0.8413 euros)

Reporting by Danilo Masoni; Editing by Bernadette Baum