These stocks are primed for a short squeeze.
Short selling has gotten a lot of attention in 2021. Throughout the year, groups of retail traders on social media have successfully orchestrated targeted buying campaigns for some of the most heavily shorted stocks in the market in an attempt to drive out short sellers and trigger short squeezes. Short squeezes are large, short-term spikes in share price that occur when a sizable number of short sellers are forced to cover, or exit, their positions by buying shares of stock. Here are eight stocks that have all the ingredients to be the next major short squeeze, according to Ortex Analytics.
Support.com Inc. (ticker: SPRT)
Support.com has been on Ortex’s radar since it named the stock a short squeeze candidate back in July. In the past two months, Support.com has experienced a massive short squeeze that has sent the stock skyrocketing more than 900%. Incredibly, the Support.com short squeeze could be just getting started. On Sept. 10, Support.com will conduct a shareholder vote to approve a reverse merger with Bitcoin transaction processor Greenidge Generation Holdings. Ortex estimates that 85% of Support.com’s float, or free-trading shares, is held in short positions, the highest percentage of any stock on this list.
Big 5 Sporting Goods Corp. (BGFV)
Big 5 Sporting Goods is a California-based sporting goods retailer. The stock is up more than 2,250% from its March 2020 lows, and short sellers have piled in. Ortex estimates 72% of the stock’s float is currently held in short positions, making it an excellent candidate for a short squeeze. In early August, Big 5 reported impressive 33.4% same-store sales growth on a two-year basis, suggesting that the company has now far exceeded its pre-pandemic sales numbers. Big 5 investors also get paid a 3.5% dividend while they wait for a possible short squeeze.
Nikola Corp. (NKLA)
Electric vehicle stocks have been battlegrounds for short sellers in 2021, and Nikola is one of the most controversial EV stocks of all. On July 29, a federal grand jury charged Nikola founder Trevor Milton with three counts of criminal fraud for lying to investors. Milton left the company in September 2020 following allegations by short seller Hindenburg Research that Nikola was spreading “an ocean of lies” about its products. Nikola shares are down 74% in the past year, but short sellers apparently see more downside ahead. Nikola’s short interest is 43% of its float, according to Ortex.
Intercept Pharmaceuticals Inc. (ICPT)
Intercept Pharmaceuticals is a biopharmaceutical company that is developing a potential treatment for chronic liver disease. Intercept shares are down 45% year to date, and rival companies attempting to treat nonalcoholic steatohepatitis have struggled as well. In May, Cantor Fitzgerald said the “biology in NASH is complex and still poorly understood.” Short sellers are betting an Intercept breakthrough is a long shot, and so far they have made a tremendous profit betting against the stock. Intercept’s short interest was just 17.5% of its float in mid-July, but that figure is now up to 40%.
Tattooed Chef Inc. (TTCF)
Tattooed Chef is a plant-based food company that went public via a special-purpose acquisition company merger in mid-2020. The company reported 45.9% revenue growth in the second quarter, but Tattooed Chef shares are down 6% year to date in 2021 as the company struggles with profitability. Tattooed Chef shares came alive in the last week of August along with several other heavily shorted stocks. According to Ortex, the latest bounce could be the beginning of a major short squeeze. Tattooed Chef’s short interest has risen from just 6.2% of its float in mid-February to 38% today.
Workhorse Group Inc. (WKHS)
Workhorse is another EV stock that has struggled mightily. The stock is down 52% year to date. Much of the sell-off occurred after the U.S. Postal Service chose Oshkosh Corp. (OSK) over Workhorse for a $6 billion next-generation delivery vehicle contract. Workhorse has since sued over the contract. In July, CEO Duane Hughes left the company. Workhorse also withdrew its guidance and said it is redesigning its vehicles based on feedback from customers. Short sellers see blood in the water, but any positive news could ignite a short squeeze. Workhorse’s short interest is 38% of its float.
Blink Charging Co. (BLNK)
Blink Charging owns and operates EV charging equipment. After a big rally in 2020, Blink shares are down 12% in 2021. Blink captured short seller attention when Citron Research editor and prominent short seller Andrew Left called Blink a “total scheme” and a “joke” back in November. Since Left went public with his bearish thesis, Blink’s short interest has grown from around 12.7% of its float to 37% of its float, according to Ortex. If EV stocks get hot again at some point, Blink has demonstrated that it has the potential for short squeeze volatility.
Prelude Therapeutics Inc. (PRLD)
Prelude Therapeutics is an early clinical-stage biotechnology company developing cancer treatment drugs PRT543 and PRT811, which are currently in first-stage clinical trials. Short squeezes often need a catalyst to pressure short sellers. Prelude may have multiple bullish catalysts ahead given management is expecting additional data on both PRT543 and PRT811 before the end of the year. Bank of America upgraded Prelude in July and is bullish on the company’s differentiated treatment approach and its potential to treat multiple cancer types. Ortex estimates that 36% of the company’s float is currently held in short positions.
Short squeeze stocks that could take off in September:
— Support.com Inc. (SPRT)
— Big 5 Sporting Goods Corp. (BGFV)
— Nikola Corp. (NKLA)
— Intercept Pharmaceuticals Inc. (ICPT)
— Tattooed Chef Inc. (TTCF)
— Workhorse Group Inc. (WKHS)
— Blink Charging Co. (BLNK)
— Prelude Therapeutics Inc. (PRLD)
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8 Short Squeeze Stocks That Could Take Off in September originally appeared on usnews.com