These stocks have the right conditions to trigger short squeezes.
Short squeezes have been among the most popular and controversial topics on Wall Street for 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.
View Inc. (ticker: VIEW)
View designs and sells smart windows that reduce energy consumption. The company went public via a special-purpose acquisition company, or SPAC, merger in March 2021. Since the merger, the stock has dropped from about $9 to less than $1.40 per share. 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 23% of VIEW’s float, or free-trading shares, 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.
Virgin Orbit Holdings Inc. (VORB)
Virgin Orbit is the satellite-launching spin-off of Sir Richard Branson’s commercial space travel company Virgin Galactic Holdings Inc. (SPCE). Virgin Orbit went public via a SPAC merger in December 2021. After opening at $8.52 on the day of its SPAC merger, Virgin Orbit shares have plummeted all the way down to less than $3.40 and have been a home run trade for short sellers up to this point. Despite the stock’s terrible performance since going public, a short squeeze could send the stock into orbit. Ortex estimates about 24% of the company’s float is currently held in short positions.
Focus Universal Inc. (FCUV)
Focus Universal provides internet of things hardware and software services. Focus is one of the rare initial public offering success stories of 2021, pricing its August IPO at $5. But as of Oct. 3, the stock was trading for $9.56. The stock initially soared as high as $25.15 in the days following its IPO, but short sellers immediately started piling in. The company has a roughly $420 million market cap but reported just $64,640 in revenue and a $1 million net loss in the second quarter. Ortex estimates about 10% of the company’s float is currently held in short positions.
Beam Global (BEEM)
Beam Global is one of many electric vehicle stocks that short sellers have successfully targeted over the last two years. Beam is a renewable energy EV charging specialist. Beam’s stock price more than doubled to as high as $75.90 in December 2020 when the company announced Montebello, California would be 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 $13. 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 20% of its float.
Up Fintech Holding Ltd. (TIGR)
Chinese online brokerage Up Fintech went public via a SPAC in March 2019 at an IPO price of $8 per share. Unfortunately, Chinese regulators have cracked down on tech stocks, specifically criticizing brokers like Up for illegally allowing customers in mainland China to buy and sell shares of U.S.- and Hong Kong-listed stocks. Meanwhile, U.S. regulators are also threatening to de-list any Chinese stocks that do not comply with a new set of strict accounting standards. Not surprisingly, the uncertainty has sent Up shares plummeting all the way down to the $3.50 range. Ortex estimates about 15% of the company’s float is currently held in short positions.
NuScale Power Corp. (SMR)
The booming IPO market has dried up this year, but NuScale Power may have picked the perfect time to go public in 2022 given energy market conditions. NuScale designs and markets small modular reactors used to generate nuclear energy. Nuclear energy is controversial, but it is also a large potential source of clean energy. NuScale shares opened at $10.70 on their first day of trading in May, and the stock has held up well amid global energy shortages. Ortex estimates about 26% of the stock’s float is held in short positions, the highest short interest of any stock on this list.
Danimer Scientific Inc. (DNMR)
Danimer Scientific produces biodegradable and compostable plastics. The company went public via a SPAC merger in December 2020. Danimer has certainly been a popular and successful trade for short sellers up to this point, as it went public at a price of around $30 per share but now trades for less than $4 less than two years later. 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.
Shift Technologies Inc. (SFT)
Online used car retailer Shift Technologies went public via SPAC merger in October 2020. Roughly seven months after Shift went public, it was back raising money yet again, selling $75 million worth of convertible notes in May 2021. In August 2022, the company reported a second-quarter net loss of $52.2 million and announced a merger with CarLotz Inc. (LOTZ), a new CEO and a new business plan that it says will make the company profitable by 2024. Short sellers are seemingly skeptical of the profitability guidance and leadership change. Ortex estimates 18% of Shift’s float is held in short positions.
Electrameccanica Vehicles Corp. (SOLO)
Shares of Canadian EV stock Electrameccanica Vehicles ripped from less than $1 in early 2020 to as high as $13.60 in late 2021 before dropping all the way back down to less than $1.40 today. Electrameccanica has reported some impressive growth numbers, including reporting more than 400% year-over-year revenue growth and a 51% sequential increase in vehicle deliveries in the second quarter. However, short sellers see that the company’s net losses are 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.
9 short squeeze stocks that could take off in October:
— View Inc. (VIEW)
— Virgin Orbit Holdings Inc. (VORB)
— Focus Universal Inc. (FCUV)
— Beam Global (BEEM)
— Up Fintech Holding Ltd. (TIGR)
— NuScale Power Corp. (SMR)
— Danimer Scientific Inc. (DNMR)
— Shift Technologies Inc. (SFT)
— Electrameccanica Vehicles Corp. (SOLO)
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9 Short Squeeze Stocks That Could Take Off in October originally appeared on usnews.com
Update 10/04/22: This story was previously published at an earlier date and has been updated with new information.
