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.
Sky Harbour Group Corp. (ticker: SKYH)
Sky Harbour, which leases aviation hangars, went public in January 2022 via a merger with special-purpose acquisition company, or SPAC, Yellowstone Acquisition Company. Once the SPAC merger was completed, Sky Harbour took off like a rocket. SKYH shares surged from less than $6 in February 2022 to as high as $43.41 in March before sliding all the way back down to $2.55. Sky Harbour’s float, or number of freely trading shares, is miniscule at just 10.2 million, creating the possibility for an extremely volatile short squeeze. Ortex estimates about 35% 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 battle grounds 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 for false statements he made while at the company. Nikola shares are down more than 85% in the past two years, but short sellers apparently see more downside ahead. Nikola’s short interest is 29% of its float, according to Ortex.
Stronghold Digital Mining Inc. (SDIG)
Stronghold Digital Mining is a cryptocurrency mining company that mines Bitcoin (BTC). The company operates roughly 25,900 mining computers. Stronghold went public via an initial public offering in October 2021 during the cryptocurrency boom, but that boom turned to bust during 2022’s crypto winter. Company shares peaked at a closing price of $33.26 on Nov. 2, 2021 but have since dropped to less than 45 cents. Stronghold’s short interest has grown to about 27% of its float.
Beyond Meat Inc. (BYND)
Plant-based protein company Beyond Meat had a disastrous 2021, and things went from bad to worse in 2022. In October, Beyond Meat announced a 19% reduction of its workforce and dropped its full-year sales guidance by 16.6%. Third-quarter revenue was also down 22.5%. The stock is down nearly 81% over the past year as of market close on Jan. 3, 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 environment. Beyond Meat’s short interest is now 39% of its float, the highest short interest of any stock on this list.
Virgin Orbit Holdings Inc. (VORB)
Virgin Orbit is the satellite-launching spinoff 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, closing at $1.79 on Jan. 3, and have been a home run trade for short sellers. Despite the stock’s terrible performance since going public, a short squeeze could send shares into orbit. Ortex estimates about 12% of the company’s float is currently held in short positions.
Fisker Inc. (FSR)
Yet another EV stock that short sellers have successfully targeted as of late is Fisker, which went public via 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 close at $6.88 on Jan. 3. The stock took a hit in December 2022 after short seller Fuzzy Panda Research said Fisker is facing liquidity issues, which Fisker subsequently denied. Fuzzy Panda isn’t the only short seller that could get burned by a short squeeze. Fisker’s short interest sits at 34% of its float.
Blink Charging Co. (BLNK)
Blink Charging owns and operates EV charging equipment. In November 2020, short seller and Citron Research editor Andrew Left called Blink a “total scheme” and a “joke,” and said shares were worth less than $10. At the time, the stock had rallied from $2 to about $28 in a matter of months, and momentum ultimately pushed Blink shares as high as $64.50 in January 2021. The stock has since traded back down to close at $10.95 on Jan. 3. Blink reported impressive 169% year-over-year revenue growth in the third quarter, but net losses also increased 67.3%. Blink’s short interest has grown to about 32% 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 $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, who had overly inflated the company’s share price. Greenwald set an $11 price target, and the stock has since traded down to close at $4.11 on Jan. 3. EVgo’s short interest is about 34% of its float. Bank of America still has an “underperform” rating for EVGO stock and has cut its target to $7.
Cricut Inc. (CRCT)
Cricut makes smart machines used for crafting and do-it-yourself projects. The company priced its May 2021 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 24% of the company’s float is currently held in short positions.
9 short squeeze stocks that could take off in January:
— Sky Harbour Group Corp. (SKYH)
— Nikola Corp. (NKLA)
— Stronghold Digital Mining Inc. (SDIG)
— Beyond Meat Inc. (BYND)
— Virgin Orbit Holdings Inc. (VORB)
— Fisker Inc. (FSR)
— Blink Charging Co. (BLNK)
— EVgo Inc. (EVGO)
— Cricut Inc. (CRCT)
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9 Short Squeeze Stocks That Could Take Off in January originally appeared on usnews.com
Update 01/04/23: This story was previously published at an earlier date and has been updated with new information.