These stocks have the right conditions to trigger a short squeeze.
Short squeezes have been among the most popular and controversial topics on Wall Street in the past couple of years. In early 2021, groups of online stock traders on Reddit began orchestrating targeted buying campaigns in some of the market’s most heavily shorted stocks in an attempt to trigger short squeezes. 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.
Arcimoto Inc. (ticker: FUV)
Arcimoto designs and develops three-wheeled electric vehicles. After gaining more than 720% in 2020, Arcimoto shares have come back down to earth. The stock is now down more than 90% from its 2021 highs and has been a home run for short sellers who timed the trade correctly. Arcimoto has a very small float, or number of fee-trading shares, of just 29.8 million, creating the possibility for an extremely volatile short squeeze. Ortex estimates about 41% of the company’s float is currently held in short positions, the highest percentage of any company on this list.
Joann Inc. (JOAN)
Joann is an omnichannel arts and crafts retailer that operates about 850 stores in the U.S. In March 2021, Joann’s initial public offering shares went for $12. After a volatile year of trading and disappointing sales numbers, Joann shares have recently fallen back below their IPO price to $7.73 as of July 1. In June, the company reported a 12.9% decline in same-store sales in the first quarter. Short sellers have routinely targeted IPO and special purpose acquisition company, or SPAC, merger stocks since the beginning of 2021. Joann’s short interest is about 30% of its float, making it a strong short squeeze candidate.
Entrada Therapeutics Inc. (TRDA)
Entrada Therapeutics is a biotechnology company focused on its proprietary Endosomal Escape Vehicle, or EEV, platform, which delivers therapeutics to organs and tissues to treat diseases. In May, Entrada presented new non-human primate data on leading clinical candidate ENTR-601-44 in treating Duchenne muscular dystrophy and said it is on track to submit an Investigational New Drug application to the U.S. Food and Drug Administration by the end of 2022. Short sellers are skeptical. Entrada priced its November 2021 IPO at $20, and the stock is already down to just $12 as of July 1. Entrada’s short interest is about 18% of its float.
Danimer Scientific Inc. (DNMR)
Danimer Scientific specializes in producing sustainable biopolymers and creating plastic products that are 100% biodegradable and compostable. Unfortunately, Danimer reported a $26.4 million net loss in the first quarter and guided for a full-year 2022 adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, loss of at least $35 million. The disappointing results have triggered a steep sell-off in Danimer shares, which have fallen from early 2021 highs of $66.30 down to just $4.72 as of July 1. Short sellers smell blood in the water for the struggling stock, and Danimer’s short interest is up to about 25% of its float.
Meta Materials Inc. (MMAT)
Meta Materials develops high-performance functional materials and intelligent surfaces. The company went public via a merger with Torchlight Energy Resources in June 2021. Torchlight had been a popular target among speculative traders, rallying 74% in a single day in the week prior to the merger. Meta Materials stock took a 40% hit in June after the company announced a deal to sell over 37 million shares of common stock at $1.35 and an equal number of warrants with an exercise price of $1.75. Short sellers love dilution, and Meta Materials’ short interest is now 16% of its float.
Regis Corp. (RGS)
Regis is a global leader in salons and cosmetology and owns popular brands such as Supercuts, SmartStyle and Cost Cutters. Regis shares are down a whopping 89% over the past year as of July 1. In June, the company received a continued listing notice from the New York Stock Exchange because its share price had dropped below $1, the minimum allowed share price for listing on the NYSE. Regis shares have since traded back over $1, but short sellers may see a reverse stock split coming at some point. Short sellers are betting on even more downside ahead, and Regis’ short interest stands at 23% of its float.
Vuzix Corp. (VUZI)
Vuzix is an augmented reality technology company that designs and produces optical components, waveguides, smart glasses, and AR solutions. The company went public in May 2021, pricing its IPO shares at $20.50. In just over a year, the stock has lost roughly two-thirds of its value and was trading at $6.70 as of July 1. Vuzix is being punished for its lack of profitability, but the company has also reported negative revenue growth in the past two quarters as well. Vuzix’s short interest has grown to about 30% of its float, but positive news could send the stock soaring.
Canoo Inc. (GOEV)
EV maker Canoo went public via a SPAC merger in December 2020. At the time, the stock was trading at $22.80. In May 2021, the company disclosed an investigation by the U.S. Securities and Exchange Commission following several executive departures. Short sellers understandably piled into the stock. In May 2022, short sellers got another reason to target the company when Canoo disclosed it has “substantial doubt about our ability to continue as a going concern.” Canoo’s shares are now trading at $1.88 as of July 1, and its short interest stands at about 24% of its float.
Beam Global (BEEM)
Yet another EV stock that short sellers have successfully targeted is renewable energy EV charging specialist Beam Global. Beam’s stock price more than doubled to as high as $75.90 in December 2020 when the company announced Montebello, California, is installing two of Beam’s solar-powered EV charging terminals to power city electric transit vans. Short sellers have since profited on Beam stock’s slide back down to around $14.14 as of July 1. Beam’s tiny float of just 7.5 million shares suggests a short squeeze could be extremely volatile. Beam’s short interest has grown to about 26% of its float.
9 short squeeze stocks that could break out in July:
— Arcimoto Inc. (FUV)
— Joann Inc. (JOAN)
— Entrada Therapeutics Inc. (TRDA)
— Danimer Scientific Inc. (DNMR)
— Meta Materials Inc. (MMAT)
— Regis Corp. (RGS)
— Vuzix Corp. (VUZI)
— Canoo Inc. (GOEV)
— Beam Global (BEEM)
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9 Short Squeeze Stocks That Could Take Off in July originally appeared on usnews.com
Update 07/05/22: This story was published at an earlier date and has been updated with new information.