9 Short Squeeze Stocks That Could Take Off

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 GameStop Corp. (ticker: GME), AMC Entertainment Holdings Inc. (AMC) and other heavily shorted stocks. 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.

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Here are nine stocks primed for the next big short squeezes, according to Ortex Analytics:

Stock Short interest as of Feb. 16 Cost to borrow*
Sirius XM Holdings Inc. (SIRI) 26% 49%
Danimer Scientific Inc. (DNMR) 25% 55%
Lexicon Pharmaceuticals Inc. (LXRX) 24% 75%
Beyond Meat Inc. (BYND) 37% 274%
Lion Electric Co. (LEV) 14% 26%
PureCycle Technologies Inc. (PCT) 55% 27%
MicroVision Inc. (MVIS) 26% 16%
Mondee Holdings Inc. (MOND) 19% 15%
Luminar Technologies Inc. (LAZR) 26% 14%

*A high borrowing cost is an indicator of high short-seller demand.

Sirius XM Holdings Inc. (SIRI)

SiriusXM Holdings is a leading provider of satellite and internet radio services, largely to the auto industry. In December, Liberty Media Corp. announced a deal to combine its Liberty SiriusXM Group (LSXMA, LSXMB, LSXMK) with SiriusXM Holdings to form a new public company called New SiriusXM, which would have a single series of common stock under the ticker SIRI. The deal is expected to be completed in the third quarter of 2024. If the stock’s short sellers exit prior to the restructuring, it could trigger a short squeeze. The stock’s short interest is up to 26% of its float, which is the number of publicly traded shares that are available to trade (some shares, like those owned by insiders or a parent company, are restricted from being publicly traded).

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 special-purpose acquisition company (SPAC) merger in December 2020 at a price of around $30 per share, but it is now trading around $1. In January, the company received a notice from the New York Stock Exchange that it was not compliant with the exchange’s listing requirement of a minimum share price of $1, and the company is still not close to profitability. Ortex estimates 25% of Danimer’s float is held in short positions.

Lexicon Pharmaceuticals Inc. (LXRX)

Lexicon Pharmaceuticals is a commercial-stage biopharmaceutical company. One of its drugs, Inpefa, was approved by the U.S. Food and Drug Administration for treatment of heart failure in May 2023. Lexicon’s stock price is already up more than 100% year to date, possibly on optimism surrounding a potential commercial launch of diabetic peripheral neuropathic pain drug LX9211. Lexicon has said LX9211, which is in mid-stage trials, has the potential to be the first new non-opioid drug for treatment of diabetic peripheral neuropathic pain in two decades. Ortex estimates about 24% of Lexicon’s float is held in short positions.

Beyond Meat Inc. (BYND)

Plant-based protein company Beyond Meat has had a disastrous couple of years, and 2023 was no exception. Beyond reported another 8.7% year-over-year drop in revenue in the third quarter after four consecutive quarters of double-digit sales declines. The stock is down 96% overall in the past three years, 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 37% of its float.

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Lion Electric Co. (LEV)

Lion Electric produces commercial electric vehicles. In July 2023, the company opened a new manufacturing facility in Illinois that will initially produce electric school buses, but it plans to expand production to other types of commercial vehicles over time. Lion went public via a SPAC merger in May 2021. Its stock initially opened at around $18.50 following the merger, but it has since dropped down to around $1.80. If Lion can deliver on its goal to produce 20,000 commercial vehicles per year at its new plant, investors could see a major short squeeze. Ortex estimates that 14% of Lion’s float is held in short positions.

PureCycle Technologies Inc. (PCT)

PureCycle Technologies recycles waste polypropylene into virgin polymer with the goal of making plastic a renewable resource. PureCycle went public via a SPAC merger in March 2021. At the time of the merger, the stock was trading at around $32 per share, but it has dropped all the way down to $5.65 as of Feb. 16. PureCycle completed its Ironton, Ohio, facility in April 2023, but the company has dealt with mechanical problems and several reliability issues that have caused it to miss bondholder operational milestones. PureCycle’s short interest is 55% of its float, the highest on this list.

MicroVision Inc. (MVIS)

Microvision is developing a lidar sensor for autonomous vehicles and has been a favorite of Reddit group WallStreetBets since early 2021. After trading as high as $28 during the peak of the Reddit trading craze in April 2021, Microvision shares have dropped back down to under $3. Skeptics see the company reported just $1 million in revenue and a $23.5 million net loss in the third quarter. However, if Microvision could report a surprise profit at some point, it could bamboozle short sellers and potentially trigger a massive short squeeze. The stock’s short interest is up to 26% of its float.

Mondee Holdings Inc. (MOND)

Mondee is a travel technology app that processes more than 50 million daily searches. The company has been focused on integrating artificial intelligence into its services, launching a new AI-powered travel platform in July 2023. Mondee also acquired Skypass Travel in August 2023 as part of its ongoing merger and acquisition strategy. The company is unquestionably putting up some impressive growth numbers, including 35% revenue growth in the third quarter. However, like many other heavily shorted stocks, Mondee’s business is not profitable. Mondee’s short interest is 19% of its float, making it a top short squeeze candidate.

Luminar Technologies Inc. (LAZR)

Luminar Technologies is another EV technology company that went public via a SPAC merger in December 2020 and has been a massive flop for investors and a huge win for short sellers. On its first day of trading back in 2020, Luminar shares jumped 30% and were trading above $22 per share. The stock has since dropped all the way back down to less than $3. Luminar’s 33% revenue growth in the third quarter suggests the company has potential, but short sellers are focused more on its $134 million net loss in the quarter. Ortex estimates 26% of Luminar’s float is held in short positions, suggesting potential for a short squeeze at some point.

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9 Short Squeeze Stocks That Could Take Off originally appeared on usnews.com

Update 02/20/24: This story was previously published at an earlier date and has been updated with new information.

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