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Shares of Spirit Airlines, Inc. (SAVE) experienced a notable decline on Wednesday, triggering concerns among investors. The company’s failure to release its earnings report and ongoing discussions with creditors regarding a restructuring plan have been the main factors contributing to the unease.

In the second quarter, Spirit Airlines reported a significant loss of $1.76 per share, which is worse than the first quarter’s reported loss of $1.36 per share. This financial downturn has been a focal point for many traders who are trying to navigate the airline's volatile stock.

Interestingly, despite the negative news, some traders believe that Spirit Airlines’ stock may soon see an upward movement. This potential rise is attributed to the dynamics of a short squeeze, a scenario in which short sellers, who bet on the stock price falling, may be forced to buy back shares to cut their losses, driving the price higher.

Short interest in Spirit Airlines stands at a staggering 35% of the outstanding shares, indicating a large portion of the stock has been sold short. For comparison, Apple’s short interest is less than 1%. Such a high short interest creates fertile ground for a short squeeze, where the upward pressure from short sellers buying back shares could lead to a rapid increase in stock price.

This phenomenon occurs because those who lent shares to short sellers might call in their loans, forcing the short sellers to purchase the shares at prevailing market prices, regardless of how high they may be. This buying activity can lead to a substantial surge in the stock price, creating a buying frenzy.

Ultimately, markets can behave unpredictably, and even amid concerning news, there remains a possibility that Spirit Airlines’ stock could rebound. This potential for unexpected market behavior is why traders continue to keep a close eye on Spirit Airlines’ shares.