Short squeezes have been among the most popular and controversial topics on Wall Street in the past couple of years. In 2021, groups of online stock traders on Reddit made headlines by orchestrating targeted buying campaigns to trigger short squeezes in some of the market’s most heavily shorted stocks. A short squeeze is a large, short-term spike in a stock’s share price that occurs when a significant number of short sellers are forced to buy shares and exit their positions all at once.
Here are nine stocks primed for the next big short squeezes, according to Ortex Analytics:
|STOCK||SHORT INTEREST AS OF OCT. 2||COST TO BORROW*|
|Lion Electric Co. (ticker: LEV)||18.7%||27.1%|
|Cipher Mining Inc. (CIFR)||29%||32.1%|
|Fisker Inc. (FSR)||45.4%||31%|
|Hyzon Motors Inc. (HYZN)||13.6%||40.8%|
|Beyond Meat Inc. (BYND)||41.5%||27.5%|
|SmileDirectClub Inc. (SDC)||23.8%||18.1%|
|Prime Medicine Inc. (PRME)||17%||13.9%|
|ChargePoint Holdings Inc. (CHPT)||22.2%||18.7%|
|Microvision Inc. (MVIS)||23.6%||12.7%|
*A high borrowing cost is an indicator of high short-seller demand.
Lion Electric Co. (LEV)
Lion Electric produces commercial electric vehicles. In July, the company opened a new manufacturing facility in Illinois to produce electric school buses, but it plans to expand production to other types of commercial vehicles over time. Lion went public via a special-purpose acquisition company, or SPAC, merger in May 2021. Its stock initially traded at more than $20 following the merger, but it has since dropped all the way down to $1.82 as of Oct. 2. If Lion can deliver on its goal to produce 20,000 commercial vehicles per year at its new plant, investors could see a major short squeeze. Ortex estimates about 18.7% of Lion’s float is held in short positions.
Cipher Mining Inc. (CIFR)
Cipher Mining operates a U.S. Bitcoin (BTC) mining business. Bitcoin prices are up 66% so far in 2023, so it’s easy to understand why Cipher shares are skyrocketing. However, short sellers likely see the stock’s incredible 353.7% year-to-date gain as overkill and are betting on a significant pullback. Cipher reported a $12.7 million net loss for the second quarter, and the stock trades at a steep valuation of 11.2 times sales. However, another significant rise in Bitcoin prices could send short sellers running for the hills. Cipher’s short interest is 29% of its float.
Fisker Inc. (FSR)
Fisker is another one of many electric vehicle stocks short sellers have successfully targeted in recent years. Fisker went public via SPAC merger in October 2020 at $9 per share. After trading as high as $31.96 during the peak of the Reddit trading craze in early 2021, Fisker shares have dropped all the way back down to close at $6.62 on Oct. 2. The stock took a hit in December 2022 after short seller Fuzzy Panda Research said Fisker was facing liquidity issues, claims Fisker subsequently denied. Fisker’s short interest is up to 45.4% of its float, the highest on this list.
Hyzon Motors Inc. (HYZN)
Hyzon Motors is a company that designs, develops and produces stand-alone and integrated hydrogen fuel cells and systems, as well as hydrogen-powered commercial vehicles. Hyzon went public via SPAC merger in July 2021 at a price of $9.70, but it has since dropped more than 87%. In June 2023, Hyzon said it has strengthened its governance and identified “material weaknesses in controls and procedures.” In September, Hyzon agreed to a fraud settlement with the U.S. Securities and Exchange Commission tied to allegations that the company misled investors. Meanwhile, the stock’s short interest is up to 13.6% of its float.
Beyond Meat Inc. (BYND)
Plant-based protein company Beyond Meat has had a disastrous couple of years, and 2023 is no exception. Beyond reported a 30.5% year-over-year drop in revenue in the second quarter, its fourth consecutive quarter of double-digit sales declines. The stock is down 94.4% in the past three years, and short sellers smell blood in the water. Beyond Meat investors were once betting on a growth stock with a massive addressable market, but short sellers see an unprofitable company with negative growth in an increasingly competitive market. Beyond Meat’s short interest is 41.5% of its float.
SmileDirectClub Inc. (SDC)
SmileDirectClub has been one of the most heavily shorted stocks in the market since it completed its high-profile IPO in 2019. The teeth-straightening company has been a home run trade for short sellers up to this point. The company went public at a price of $23 per share, but roughly four years later, it filed for chapter 11 bankruptcy protection on Sept. 29. The stock is down 99% from its IPO price to close at 16 cents per share on Oct. 2., leaving it at serious risk of being delisted from the Nasdaq. Its founders will give the company a cash injection of at least $20 million to help stabilize its financials, but the market doesn’t have much faith in the company’s long-term prospects. Ortex estimates 23.8% of SmileDirectClub’s float is held in short positions.
Prime Medicine Inc. (PRME)
Prime Medicine is one of the few companies that went public in a difficult market in 2022. The company is developing its gene-editing technology, Prime Editing, to treat a wide range of genetic diseases. Earlier this year, Prime nominated PM359 as its first development candidate for treating chronic granulomatous disease. It also reported data demonstrating the potential of its PASSIGE platform to produce multiplex-edited CAR-T cells, suggesting Prime Editing could be used to treat cancers and immune diseases. Short sellers are seemingly skeptical about the company’s technology. Prime Medicine’s short interest is 17% of its float.
ChargePoint Holdings Inc. (CHPT)
ChargePoint isn’t an EV maker, but it does operate the largest network of EV charging stations in North America and Europe. The stock is down 69% in the past three years as the company has failed to demonstrate it can turn its impressive growth into profits. Revenue was up 39% year over year in the second quarter, but ChargePoint reported a $125.3 million net loss. If ChargePoint takes Wall Street by surprise by turning a profit at some point, short sellers could trigger a short squeeze by scrambling for the exit. ChargePoint’s short interest is 22.2% of its float.
Microvision Inc. (MVIS)
Microvision is developing a lidar sensor for autonomous vehicles and has been a favorite of Reddit group WallStreetBets since early 2021. After trading as high as $28 during the peak of the Reddit trading craze in April 2021, Microvision shares have dropped back down to close at $2.10 on Oct. 2. Earlier this year. Microvision demonstrated its short squeeze potential, soaring from under $2 to as high as $8.20 in less than six weeks. Short sellers see the company reported less than $1 million in revenue and a $20 million net loss in the second quarter. The stock’s short interest is 23.6% of its float.
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