Short squeezes have been among the most popular and controversial topics on Wall Street in the past couple of years. In 2021, groups of online stock traders on Reddit made headlines by orchestrating targeted buying campaigns to trigger short squeezes in some of the market’s most heavily shorted stocks.
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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:
| Stock | Estimated short interest percentage of free float |
| EVgo Inc. (ticker: EVGO) | 32% |
| Prime Medicine Inc. (PRME) | 17% |
| Danimer Scientific Inc. (DNMR) | 17% |
| Tattooed Chef Inc. (TTCF) | 30% |
| Smart for Life Inc. (SMFL) | 90% |
| Electrameccanica Vehicles Corp. (SOLO) | 9% |
| Nikola Corp. (NKLA) | 19% |
| Cricut Inc. (CRCT) | 16% |
| BriaCell Therapeutics Corp. (BCTX) | 15% |
EVgo Inc. (EVGO)
EVgo is an electric vehicle charging technology company that short sellers have targeted aggressively. EVgo went public via a special-purpose acquisition company, or SPAC, merger in July 2021, and its shares opened at about $15 following the merger. The stock peaked at $19.59 in November 2021 but has since traded all the way back down to close at $5.68 on May 1. In June 2022, short seller Fuzzy Panda Research said EVgo shares were still overvalued, alleging problems with broken chargers, low network utilization and “questionable” corporate partners.
Prime Medicine Inc. (PRME)
Prime Medicine is one of the few companies that went public in a difficult market in 2022. Prime Medicine is developing its gene-editing technology, Prime Editing, to treat a range of genetic diseases. Short sellers are seemingly skeptical about the company’s technology. So far in 2023, Prime has nominated its first development candidate for treating chronic granulomatous disease, or CGD. It has also reported preclinical proof-of-concept data for treating Friedreich’s ataxia and cystic fibrosis, and positive preclinical safety data for treating Wilson’s disease and CGD.
Danimer Scientific Inc. (DNMR)
Danimer Scientific produces biodegradable and compostable plastics. Danimer has certainly been a successful trade for short sellers. The company went public via a SPAC merger in December 2020 at a price of about $30 per share, but it trades much lower now and closed at $2.93 on May 1. In March, Danimer guided for accelerating revenue growth and improving margins in fiscal 2023. Up to this point, however, Danimer’s net losses have grown along with its revenue, including a $28.1 million net loss in the fourth quarter.
Tattooed Chef Inc. (TTCF)
Tattooed Chef is a plant-based food company that went public via SPAC merger in 2020, and the company initially reported impressive growth numbers. Unfortunately, it’s struggling with profitability. After delaying its annual report in March, Tattooed Chef received a noncompliance notice from Nasdaq in April. The stock is down more than 90% in the past two years, but any meaningful progress toward profitability or a rebound in growth could be enough to send short sellers running and trigger a major short squeeze. Tattooed Chef’s short interest has remained elevated in 2023, while its stock price has dropped down to $1.56 as of May 1.
Smart for Life Inc. (SMFL)
Smart for Life develops, produces and markets nutrition products for weight loss and other wellness needs. The company went public at an IPO price of $10 per share in February 2022. In April, the company completed a 1-for-50 reverse stock split to maintain Nasdaq compliance. Even after the reverse split, shares closed at just $3.22 on May 1. Incredibly, Smart for Life shares are now down 98% in the 14 months since its IPO. At this point, short sellers seem to believe the stock is completely worthless.
[READ: How Much Would $10,000 Invested in Amazon Stock 20 Years Ago Be Worth Today?]
Electrameccanica Vehicles Corp. (SOLO)
Shares of Canadian EV company 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 close at 49 cents on May 1. In February, the company announced a voluntary safety recall of its SOLO G3 vehicles. In April, Electrameccanica announced it would repurchase all 429 SOLO G3 and G2 vehicles from model years 2019, 2021, 2022 and 2023 for the full purchase price of the vehicles, including taxes. A successful turnaround seems like a long shot at this point.
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. Nikola shares are down more than 92% in the past two years, but short sellers apparently see more downside ahead.
Cricut Inc. (CRCT)
Cricut makes smart cutting 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 March, Cricut announced impressive 23% total-user growth and 28% paid-subscriber growth in the fourth quarter. Short sellers likely focused more on the company’s 32% drop in revenue in 2022. Still, unlike many recent IPOs that short sellers have targeted, Cricut has reported six consecutive profitable years, and a rebound in revenue growth could trigger a major short squeeze.
BriaCell Therapeutics Corp. (BCTX)
BriaCell is a clinical-stage biotechnology company developing novel immunotherapies for cancer treatment. The company’s lead cancer treatment candidate, Bria-IMT, has been awarded fast-track status by the U.S. Food and Drug Administration. The treatment is only in early trials at this point, however. In January, BriaCell said it has “approved measures to address alleged illegal trading activity” in its stock that “may have artificially depressed its share price.” If the stock actually has been artificially depressed, it could be in for a major short squeeze at some point.
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9 Short Squeeze Stocks That Could Take Off in May originally appeared on usnews.com
Update 05/02/23: This story was previously published at an earlier date and has been updated with new information.
