The company is normally one of the quieter stocks on the ASX, but speculators have taken up a huge short position in the company  (betting that its share price will fall) that appears to be backfiring.

Unlike the GameStop drama in the US, there is no Reddit group niggling from the sidelines pushing the share price up to punish the hedge funds, but the internet chat groups were alive with discussion about how the short positions were failing.

EML’s backers were also cheering it on.

“I’m calling on the Reddit Army to get behind EML as shorters still have 15 million shares to buy,” head of equities at TAMIM Asset Management Ron Shamgar said.

About 24 million of the 360 million EML shares were in a short position before today’s profit announcement, which means investors had placed big bets that the stock would fall in price over the next few days.

In this case, it hasn’t worked. Instead, the company, which provides payment products like gift cards globally, produced a healthy profit on record revenues for the first six months of the financial year and then reinstated a guidance for its full-year profit of up to $54 million.

Its share price jumped 17 per cent to $4.98 on huge volume of almost 10 million shares, about five times the normal daily volume.

Shamgar (whose company holds EML shares) said some of that could be attributed to the shorters buying the stock to cover their positions and reduce losses.

“It’s definitely the shorters,” he said.

“I think it will pop again tomorrow because they will have to finish covering (their positions),” he said.

Shorting, or short selling, is when a trader borrows shares of a particular stock because they believe the price is about to fall. They then sell the shares and buy them back at a lower price. The borrowed shares are returned and the trader pockets the difference.

The strategy is legal but considered high risk. In some cases it can force a company’s shares to trade much lower than they would have without the strategy.