These stocks have the right conditions to trigger short squeezes.
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.
Lightwave Logic Inc. (ticker: LWLG)
Lightwave Logic is a technology company developing next-generation electro-optic polymers to increase the efficiency of internet infrastructure by converting data into optical signals. Prominent short seller Kerrisdale Capital singled out Lightwave in June in a series of Twitter posts in which the firm said Lightwave has been stuck in the “development stage” for 30 years and its photonic device will “probably never come out.” Lightwave shares ripped higher by 1,400% in 2021, demonstrating its short squeeze potential. Ortex estimates about 16% of the company’s float, or free-trading shares, is currently held in short positions, suggesting significant squeeze potential remains.
Focus Universal Inc. (FCUV)
Focus Universal provides “internet of things,” or IoT, hardware and software services. Focus is one of the rare IPO success stories of 2021, pricing its August public offering at $5. As of Sept. 6, the stock was trading at $10.12. The stock initially soared as high as $25.15 in the days following its listing on the Nasdaq, but short sellers started piling in. Focus has the smallest float on this list at just 17.7 million shares, creating the possibility for an extremely volatile short squeeze if the stock regains positive momentum. Ortex estimates that about 10% of the company’s float is currently held in short positions.
Danimer Scientific Inc. (DNMR)
Danimer Scientific produces biodegradable and compostable plastics. The company went public via a special purpose acquisition company, or SPAC, merger in December 2020. Danimer has certainly been a popular and successful trade for short sellers up to this point. The company went public at a price of about $30 per share, but less than two years later it is trading under $5. In December 2021, Danimer celebrated its one-year anniversary on the public market by announcing plans to sell $175 million in debt, news that understandably sent the stock tumbling 20%. Ortex estimates 20% of Danimer’s float is held in short positions.
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 more than 60% of its value and is now trading at around $7.20. Vuzix is being punished for its lack of profitability, but the company has also reported negative revenue growth in the past two quarters. Vuzix’s short interest has grown to about 27% of its float, but positive news could send the stock soaring.
EVgo Inc. (EVGO)
EVgo is an electric vehicle charging technology company that short sellers have targeted aggressively. EVgo went public via a SPAC merger in July 2021, and its shares opened at $15 following the merger. In November 2021, Bank of America analyst Ryan Greenwald downgraded EVgo to “underperform” and said the stock was benefiting from “charging euphoria” among traders, which had overly inflated the company’s share price. Greenwald set an $11 price target, and the stock has since traded down to $8.84 as of Sept. 6. EVgo’s short interest is now about 32% of its float, and Greenwald has cut his target to $8.
Electrameccanica Vehicles Corp. (SOLO)
Shares of Canadian EV stock Electrameccanica Vehicles ripped from under $1 in early 2020 to as high as $13.60 in late 2021 before dropping all the way back down to $1.39 on Sept. 6. Electrameccanica has reported some impressive growth numbers, including reporting nearly 420% year-over-year revenue growth and a 51% sequential increase in vehicle deliveries in the second quarter. However, short sellers see the company’s net losses are also growing. If Electrameccanica can report a surprise profit at some point, the stock could be primed for a huge short squeeze. SOLO’s short interest is about 14% of its float.
Fisker Inc. (FSR)
Yet another EV stock that short sellers have successfully targeted as of late is Fisker. Fisker went public via a SPAC merger in October 2020 at a price of about $9. 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 $8.25 as of Sept. 6. The stock took a hit in late May after Fisker announced an at-the-market distribution agreement to sell up to $350 million in stock. Short sellers love dilution, and Fisker’s short interest is up to 35% of its float, the highest of any stock on this list.
AppHarvest Inc. (APPH)
Agriculture technology stock AppHarvest went public via a SPAC merger in February 2021. The stock opened above $35 on its first day of trading. Roughly a year and a half later, AppHarvest shares are priced at $2.72 as of Sept. 6, and the stock has been a major moneymaker for short sellers. In January 2022, AppHarvest shares plummeted 20% in one day when it reported a $60 million goodwill charge related to its investment in Root AI, and the artificial intelligence and robotics business has yet to demonstrate it can be profitable. AppHarvest’s short interest has grown to about 20% of its float, according to Ortex.
View Inc. (VIEW)
View designs and sells smart windows that reduce energy consumption. The company went public via a SPAC merger in March 2021. Since the merger, the stock has dropped from about $9 to $1.60 as of Sept. 6. In November 2021, View said it found “material errors” in its accounting. View restated its 2021 financial report in May 2022, and the company has guided for revenue growth of between 41% and 62% in the second half of 2022. Ortex estimates about 21% of VIEW’s float is now held in short positions, and its low share price could make it an attractive target for traders looking to trigger a short squeeze.
9 short squeeze stocks that could sail in September:
— Lightwave Logic Inc. (LWLG)
— Focus Universal Inc. (FCUV)
— Danimer Scientific Inc. (DNMR)
— Vuzix Corp. (VUZI)
— EVgo Inc. (EVGO)
— Electrameccanica Vehicles Corp. (SOLO)
— Fisker Inc. (FSR)
— AppHarvest Inc. (APPH)
— View Inc. (VIEW)
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9 Short Squeeze Stocks That Could Take Off in September originally appeared on usnews.com
Update 09/07/22: This story was published at an earlier date and has been updated with new information.
