Reddit traders appear to be targeting a heavily shorted mortgage lender for their next squeeze

• Wall Street Bets traders claim to be pouring thousands of dollars into a company called UWM Holdings.
• Shares of the mortage lender are "undervalued and over shorted," one Redditor told Insider.
• Social media sentiment around the stock is largely positive, $4.

Some retail traders on Reddit's infamous Wall Street Bets page are going all-in on mortgage lender $4 at a time when the stock is heavily shorted.

In the past week, one Redditor claimed they went "all in," pouring $200,000 into the stock. Another claimed to have invested $43,000 with hopes of replacing their Honda Civic with a sports car. Another said they invested $140,000. Posts on the subject received thousands of upvotes, aka likes.

One Redditor, who got 463 upvotes on his post, said the short squeeze in UWM stock is "$4." In a response to Insider, the Redditor, who asked to remain anonymous, said the stock is "undervalued and over shorted," adding that "they have a good CEO, and post-COVID mobility should put houses back on the market."

The Redditors did not immediately reply to Insider's request for comment or verification.

On social media, sentiment around the stock is largely positive, according to data from Hype Equity, as 70% of conversations lean bullish. According to the data, the term "short squeeze" is part of 10% of the conversations and buying shares or calls is part of 11%.

Retail traders from Wall Street Bets, known for creating the $4 that began earlier this year, have begun a trend of flooding into heavily shorted stocks like AMC Entertainment and BlackBerry in an effort to $4. If they're forced to close their positions by buying shares, that pushes the stock higher.

The Pontiac, Michigan-based mortgage lender, is shorted 13% of its float, according to $4.

The company went public via SPAC with an eye-popping $16 billion valuation at the beginning of the year. As the nation's $4, UWM provides the cash to finance mortgages to a network of brokers across the country instead of signing home loans directly.

Since its public debut, shares have largely declined, dropping from highs around $14 to lows around $6 earlier earlier this month. The stock has since recouped some of the losses and is trading around $8.

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