Why is the Weebit Nano share price up almost 30% in three days?

This tech stock has caught the eye this week. Why are its shares jumping?

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The Weebit Nano Ltd (ASX: WBT) share price is rising strongly for a third day in a row.

At the time of writing, the semiconductor company's shares are up 11% to $3.69.

This means that its shares are now up 27% since Tuesday's close.

Why is the Weebit Nano share price racing higher?

While it is unclear why its shares rose strongly on Wednesday, the gains from yesterday and today have been driven by the release of an announcement.

As we covered here, that announcement reveals that the company has entered into a commercial agreement with South Korea foundry DB HiTek.

Weebit Nano advised that DB HiTek has licensed the company's memory technology, Weebit Resistive RAM (ReRAM). This will allow its customers to integrate the technology as embedded non-volatile memory (NVM) in their systems on chips (SoCs), should they so desire.

Judging by the Weebit Nano share price response, it seems that some investors believe that DB HiTek's customers will be taking advantage of its availability. However, the company has acknowledged that it can't say for sure if this will be the case. It explains:

The economic materiality of this agreement is not known at this time due to the contingent nature of the license fees and royalties, as they depend on the number of customers who sign up to use Weebit's technology and on the number of chips those customers produce using Weebit's technology.

One group of investors that appear doubtful on the company's future are short sellers.

Short interest in Weebit Nano has been increasing at a solid rate since March. So much so, that the company sits just outside the top ten most shorted ASX shares with short interest at 6.72%. This is the highest level it has ever been, according to my data.

They appear to believe this is just another meme stock like Brainchip Holdings Ltd (ASX: BRN) with all hype and no substance.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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