I Accidentally Called The Next GameStop... Jack In The Box Update

Jack in the Box, ticker j a c k, is the next big meme stock. And today I'm going to show you why. In fact, I used Claude to build a full model estimating where this stock is likely to go, and I want you to see it. Now, 3 and 1/2 weeks ago, I posted a video about this forgotten little $13 burger stock. I said it had the same ingredients to become the next great meme stock. A tiny float, a mountain of short sellers, and a real fundamental turnaround underneath it all. 2 hours after the video went live, the stock was up 20%. 3 days later, it was up 38%. Now, I read most of your comments, and most of you are extremely kind. But there's always a couple of jerks in there having something to say. And in this case, they said I moved the stock with my video. And sure, I'm sure those of you who agreed with my logic and bought some shares maybe helped it along a little. But it wasn't just our little community here on YouTube. The stock was also added to the Russell index that very next day, meaning it had forced buying coming into the stock from all of those passive investment funds. And the day after the video, someone on Reddit short squeeze forum also posted about Jack. Same share count, same short interest he walked through and wrote, quote, "There's a recent video online about it which I can't link to." Wonder what video that was. Anyway, today I'm going to give you a full update. What actually happened, the number that tells me the squeeze is not over, and exactly what I did with my shares, including the part where I lost a $10,000 profit because I was on vacation. But we're going to get into that. So folks, make sure to subscribe to the channel cuz this story is still developing, and I'm going to do my best to keep you in front of it. So let me break this down. First of all, the first part of the squeeze played out very quickly. Monday, June 29th. Video goes up, Jack opens around 14 bucks, closes at 16.60. Up over 20% on the day. Biggest single day in almost 5 years. 3 and 1/2 million shares of volume. Uh for a stock that typically trades around 500,000. So, seven times the normal firepower in one session. And it didn't just stop after a day. It kept climbing up 45% in five trading days, touching $17.91 on July the 2nd. So, that's your first clue right there. That's what lets you know you've got a potential firework right here. And all it needs is a little spark to get it going. Now, the financial press caught on pretty quick as well. Schaeffer's Investment Research posted Jack was having its best day in 5 years as traders hunted for the next heavily shorted restaurant stock. Investing.com also ran a big headline about Jack in the Box being up on the short squeeze. And on top of the retail buying and the short squeeze, on top of the addition into the Russell index, the company also closed a $500 million refinancing that pushed their big debt maturities out to 2029. So, the whole Jack is going bankrupt next month story got a lot harder to tell. But here's the update I want you to see. Now, in the last video I told you the whole meme stock mechanism runs on trapped short sellers. So, when a a heavily shorted stock, meaning people are betting against it, rips higher, the shorts to get out have to buy the stock back to stop the bleeding. That's what pours diesel fuel on the fire. You've got retail buyers getting into this going higher, and you've got short sellers realizing they're wrong, they're also buying to get out. So, it's a double whammy. And after a 30% move, you would assume the shorts ran for the exits, right? Guess what? They didn't. The mid-June report showed 6.72 million shares sold short. That's 40% of the float. The new report, which is dated June 30th, so after the squeeze, still showed 6.7 million shares short, basically unchanged. Now, the new report should have dropped today, but I've not seen it yet. These things come out every 15 days, and there's typically a 9-day lag. So, the July 15 report should post July 24th. As of 2:00 p.m. Central when I'm shooting this, it is not out yet. I'll be watching for that Monday and over the weekend, but my guess is not only did they not cover their shorts, I'm betting they increased their short exposure, which means the squeeze could be even bigger. So, this thing is still very much alive. I'm as bullish today as I was in June. Now, before I show you what's going on with my position and the model where I've laid out what the stock is likely to do, click the link in the description to sign up for my Black Ops trading service. It is $5 for the entire year. We do live, 1-hour interactive mentoring sessions, me, you, and the other members every week for a year, all included for that five bucks. This gives us a lot of time to discuss opportunities, review your stocks, and answer all your questions in greater detail live. You'll also get my weekly newsletter delivered to your inbox, bonus reports, indicators, a ton of stuff, just five bucks. So, click the link in the description, scan the QR code, or go to tradewithross.com to get signed up. Now, let's talk about my own trade here, the good and the bad. I promised you both. This one has both. So, let's go back to a chart here Jack in the Box. Now, my cost basis on this thing was around $13.90. So, I bought kind of in here and added added on the breakout. So, I was long in in here at 13.90, okay? Here, I left to go on a Disney cruise with my four and seven-year-old children. I promised them no computers, no work, nothing. I will turn it off. Now, I didn't have a stop loss on Jack. I had a firm conviction in this, but I thought, you know what? Crazy things happen. I'm just going to throw a stop-loss up there, and I put it just at my cost base. Didn't really put think much put much thought into it, just threw it up here at $13.90. It tagged me out by 12 cents, and then ripped right back here into 17. Felt like a total idiot. Thought, man, I was up 10 12,000 dollars. I let all that go away, and here it is bouncing. So, I've been waiting patiently for a chance to get back in at 14. I thought if it fails the 200, it'll come down. And today, or actually yesterday, uh we got it. So, this is the initial breakout. The big story is the short squeeze, but from fundamental standpoint, it also looks really good. It's a textbook rounded bottom. You see the consolidation in those shares as longs are building positions, coming in tightly. There's the the breakout to the high side, little retest, rolled over, and luckily we're getting uh uh a second one in here. So, if you missed the first video, you still have the opportunity to buy the stock at the same price at around 14 bucks. I have bought my position back. I have orders in. I hate that I missed it yesterday. I was very busy working. I should have I know to buy the first retest of the 50-day moving average. I know to do that. I should have added at 13.30. I didn't, so I've got an order to add more into the 13s if it comes, but ideally I'd like to build into this position. And I want to add in weakness, meaning pulling back to the support levels, and also into strength as we break out of these highs, cuz that's when we really know we could be onto something, okay? So, total bonehead move on my part, but nonetheless, I am now back in the stock and looking for it to go much, much higher. So, what is the next spark for the stock, and where does the model say it's going to go? Well, the next big spark likely, at least the only thing on the calendar is earnings. The company's expected to report in early August. And so, when you have 40% possibly more of the float short, meaning of all the shares trading out there, 40% of them are being bet against, the shorts need everything to go wrong. They need bad sales. They need declining same-store sales. They need bad earnings. They need ugly debt. They need it all to work. You've got a stock Look, this was a $100 stock 2 years ago. Today, it's 14. It is priced for failure. If anything goes right, and things are going right, as you'll see here in a moment, the stock gets legs and starts running. This is not like an Nvidia or Apple these had decimate last quarter. They just need to show they're not losing. That sales are not falling. There's any level of improvement at that company, that starts rising. Again, we got that short fuel uh fire to throw on top of it, okay? So, there's a turnaround story. I laid it out in the last video, but Mark King, the guy who ran Taco Bell and saved them, is in the CEO seat. Uh they sold Del Taco to bring some cash in and help the balance sheet out. The stock trades at 0.2 times sales, which is dirt cheap for a 75-year-old brand that's still profitable. And I want to show you my model. Okay, so, here it is. Now, again, don't bet the farm on this thing, but I had it run some assumptions. Um two things going for the company right now. One, not a ton of profit. They're not losing money, but they're not just raking it in. And and because of that, because the same-store sales, uh excuse me, the same-store sales have uh declined or were declining, it's priced at a very low multiple, okay? So, generally, the faster a company is growing, the higher the multiple. So, if you got a company making a dollar share, but they're growing at 50% a year, it'll trade at 50, 100 times those earnings. If a company's in decline, it might trade at four, five times those earnings or that EBITDA. And that's the case here. It's trading at like four, very, very low. Um we adjust for debt, six times. But, the fair value based on just an eight to nine multiple, putting in line with like a Wendy's or a company that's just just there, not growing, but stable, buzz boost the fair value of this stock to 21 and 1/2 dollars a share. Just off the bat, where it should be. Okay? Bankruptcy odds in the next 24 months extremely low, less than 10%. Uh 2026 EBITDA guy, I mean, they're they're estimating their EBITDA as earnings before interest, tax, and depreciation 225 to 235 million. Okay? Not a huge number, but again, you're talking about a company that's only worth 275 million dollars, the whole company. All right? And shortage is very, very high. And like I said, yes, trading at around four. Okay, I wouldn't know where to look. Yeah, trading at around four times forward earnings. So, here's the revenue uh history as well as the projections going forward. As you can see, from '23, '24, '25, declined a little bit. Look at it kind of bottom out here and stabilize and slowly begin to grow. And this chart here in the bottom left corner to me tells the story. This is the turnaround signal. So, uh restaurants, retail, judged very hard on what they call same-store sales, right? It's not enough just to open 20 new restaurants a year. They want to see each one generating more revenue, more sales. And that number was declining in 2025, '24, coming down here. But, look at the improvement. Uh already, quarter-to-date, they're basically flat. And this is what happens, right? You're losing, losing, losing, come back, okay, we're stabilizing. Now let's improve things. And the short interest just keeps ripping. So, here's the price scenarios over the next 6, 12, and 24 months. So, the blue line here uh is the base case, stabilized normal valuation, puts it somewhere in the neighborhood around 26 bucks over 12-24 months. Bull case in the 40s, bear case meaning everything goes wrong, the turnaround fails, the debt creeps, the bankruptcy down to like four bucks. So, base case around 26. For a stock trading at 14, that's about a 90% upside, and that is nothing that does not imply anything involving the short squeeze. And this alone shows you the value of what that multiple is worth, the enterprise value over EBITDA multiple, and that is all up to the market based on what they see as this company's future. So, um shows the debt there versus the equity, bankruptcy restructuring odds, growth outlook. Um shrinking around 4% this year, but then stabilizing, beginning to to to to grow. This is just a model, these are estimates, anything can happen, they could have the hot new lunch, you never know, but anyway, this is where the model believes we should see J A C K stock. Now look, this is a very volatile stock. When you look at the ADR, the average daily range, it moves 10% a day on average from high to low. But that same volatility, the one that shook me out of my shares, I was on vacation, is the same volatility that had the stock up 38% in three days. It works both ways, and this stock just proved it can move. Bottom line is the squeeze fuel is still there, the company is still cheap, the turnaround is still on track, and the shorts are still standing on those tracks about to get run over. Folks, if you got value out of this video, do me a a leave me a comment below, make sure to subscribe to the channel. And if you haven't already, make sure to join that $5 Black Ops trading special. You will be amazed what you can learn with an hour of live interactive coaching every week for a year. I'll show you my buy and sell rules. I'll show you how to find a leading stocks in a leading groups. I'll show you what healthy market conditions look like and ugly ones and when to really lean into it and and maybe when it's time to step on the brakes a little bit. Uh we'll look at your stocks. Nothing is off limits during these 1-hour Monday sessions. You'll also get my newsletter every week, bonus reports, ton of other stuff. So, click the link in the description, scan that QR code over here in the corner, or just go to tradewithross.com to get signed up. And folks, I'll see you in the next video.