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Tupperware Brands

stock has surged over 700% the past two weeks in a rally that largely has gone unexplained. Its earnings report expected on Wednesday could put an end to the surge.

Tupperware

(ticker: TUP) stock was climbing 16% Tuesday to $4.95. That would be the stock’s highest close since November 2022, according to Dow Jones Market Data. Shares of the reusable container brand hit their 52-week closing low on July 18, at 62 cents a share.

There has been no positive news to drive

Tupperware

‘s stock higher. In fact, before the stock surge in July, shares of Tupperware had fallen 85% this year through July 18.

So what is driving the stock so much higher in recent weeks? Retail traders have jumped on the stock the same way their trading activity inflated the share prices of

GameStop

(GME),

Bed Bath & Beyond
,
and

AMC Entertainment Holdings

(AMC) in recent years. Their moves coincide with other investors taking short positions in the stock, or betting that it was going to decline.

Tupperware’s short interest as a percentage of float was 30.1% as of Tuesday, and was 27.9% on its closing low in July, according to S3 Partners.

In an attempt to squeeze institutional short sellers, meme traders will band together and buy up shares of well-known companies that are struggling, with volatile stock moves and heavy short action. Most recently, meme traders bought up shares of Bed Bath & Beyond before the company officially filed for bankruptcy.

Before Tupperware’s stock surge, investors were concerned the company was on track to go out of business. Tupperware said in a filing with the Securities and Exchange Commission on April 3 that “there is substantial doubt about its ability to continue as a going concern.”

This follows Tupperware reporting preliminary operating results for the fourth quarter back in March, when the company said 2022 sales declined 18% from 2021. Tupperware hasn’t reported quarterly results since.

The company didn’t immediately respond to a Barron’s request for comment on Tuesday.

Tupperware then announced on April 7 that it was working with financial advisors to improve its capital structure and better position the business.

The most recent press release on the company’s website is from June 7, when Tupperware said that it received a notice from the New York Stock Exchange indicating that it wasn’t in compliance with continued listing requirements. The company’s average global market capitalization over a consecutive 30 trading-day period was less than $50 million, and the average closing price of the company’s common stock was less than $1 over a consecutive 30 trading-day period.

“Their products haven’t really changed, there is a lot more competition, and then in terms of their selling method, they didn’t really adapt to the changing environment of going online,” Tom Bruni, senior writer at Stocktwits, said in an interview with Barron’s. StockTwits is a social-media platform designed for sharing ideas between investors.

The company is scheduled to report second-quarter earnings on Wednesday, according to FactSet. Barron’s tried to confirm the release date from Tupperware but didn’t receive a reply. In a filing with the SEC on June 30, the company said it expects to file its quarterly report by late September 2023. However, there can be no assurance that it will be filed by that date, the filing said.

If Tupperware releases its results, investors will be looking for an update on whether or not it was able to improve its capital structure and overall business model, Bruni said.

“That’s kind of when the rubber will meet the road whether or not the fundamentals and the turnaround story that’s kind of driving the stock currently actually match up with what’s happening in the underlying business,” Bruni said.

“It’s going to take some really, really good news for the stock to kind of continue this massive run that it’s had. More than likely the market is probably going to be disappointed with the business update,” he added. Bruni said that the company’s issues are long-term structural ones that most likely have not been resolved over the past quarter.

Write to Angela Palumbo at [email protected]