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.
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. Incredibly, the stock is now down more than 99% from its 2021 highs, and it has been a home run for short sellers who timed the trade correctly. Arcimoto has a very small float, or number of free-trading shares, of just 38.1 million, creating the possibility for an extremely volatile short squeeze. Ortex estimates about 30% of the company’s float is currently held in short positions, so any significant bounce could send short sellers running.
Nikola Corp. (NKLA)
Electric vehicle stocks have been battlegrounds for short sellers in the past two years, and Nikola is one of the most controversial EV stocks of all. Nikola founder Trevor 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. In October 2022, Milton was found guilty of three counts of fraud. Nikola shares are down 85% in the past two years, but short sellers apparently see more downside ahead. Nikola’s short interest is 31% of its float, according to Ortex.
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 around $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 close at $7.63 on Dec. 2. 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 29% of its float.
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 around $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 a $10 price target, and the stock has since traded down to around $6.09 on Dec. 2. EVgo’s short interest is now about 30% of its float. Bank of America still has an “underperform” rating for EVGO stock and has cut its target to $7.
Beam Global (BEEM)
Sticking with the EV stock theme, renewable energy EV charging specialist Beam Global is yet another stock short sellers have successfully targeted in the last two years. 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 $17.70. Beam’s tiny float of just 8.1 million shares, the smallest of any stock on this list, suggests a short squeeze could be particularly volatile. Beam’s short interest has grown to about 20% of its float.
Beyond Meat Inc. (BYND)
Plant-based meat company Beyond Meat had a disastrous 2021, and things have gone from bad to worse in 2022. In October, Beyond Meat announced it is cutting 19% of its workforce and reduced its full-year sales guidance by 16.6%. Third-quarter revenue was also down 22.5%. The stock is down 83% in the past year, 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 now more than 40% of its float, the highest short interest of any stock on this list.
Chicken Soup for the Soul Entertainment Inc. (CSSE)
Chicken Soup for the Soul Entertainment is an advertising-supported video-on-demand, or AVOD, company. It is the parent company of the Crackle and Chicken Soup for the Soul streaming services, and it recently acquired video rental kiosk provider Redbox Entertainment for $370 million. Chicken Soup bulls see value in Redbox’s 36,000 movie rental kiosks and 40 million loyalty program members, but short sellers likely see a dying DVD business that recently warned investors there would be “substantial doubt” Redbox could remain a going concern if the buyout fell through. Chicken Soup for the Soul’s short interest is now 14% of its float.
Cricut Inc. (CRCT)
Cricut makes smart machines used for crafting and do-it-yourself projects. The company priced its May 2021 initial public offering, or IPO, at $20 per share, and the stock has since lost more than half its value. In November, Cricut announced impressive 30% total user growth and 35% paid subscriber growth. However, short sellers likely focused more on the company’s 32% drop in revenue. Still, unlike many recent IPOs that short sellers have targeted, Cricut has reported 15 consecutive profitable quarters, and a rebound in revenue growth could trigger a major short squeeze. Ortex estimates about 23% of the company’s float is currently held in short positions.
Danimer Scientific Inc. (DNMR)
Danimer Scientific produces biodegradable and compostable plastics. Danimer has certainly been a popular and successful trade for short sellers up to this point. The company went public via a SPAC merger in December 2020 at a price of around $30 per share, but less than two years later it is now trading under $2.50. 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%. In November, Danimer said it has “several significant expected customer product launches” coming in the months ahead, but short sellers are skeptical. Ortex estimates 20% of Danimer’s float is held in short positions.
9 short squeeze stocks that could take off in December:
Arcimoto Inc. (FUV) Nikola Corp. (NKLA) Fisker Inc. (FSR) EVgo Inc. (EVGO) Beam Global (BEEM) Beyond Meat Inc. (BYND) Chicken Soup for the Soul Entertainment Inc. (CSSE) Cricut Inc. (CRCT) Danimer Scientific Inc. (DNMR)
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9 Short Squeeze Stocks That Could Take Off in December originally appeared on usnews.com
Update 12/05/22: This story was previously published at an earlier date and has been updated with new information.
