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.
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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 | Short interest as of Aug. 16 | Cost to borrow* |
| Arca biopharma Inc. (ticker: ABIO) | 101.3% | 70.1% |
| Torrid Holdings Inc. (CURV) | 16.6% | 71.9% |
| Pulse Biosciences Inc. (PLSE) | 17.3% | 44.4% |
| Spirit Airlines Inc. (SAVE) | 29.3% | 50.2% |
| Luminar Technologies Inc. (LAZR) | 21.2% | 31.9% |
| Capricor Therapeutics Inc. (CAPR) | 23.9% | 29.0% |
| B. Riley Financial Inc. (RILY) | 77.9% | 111.0% |
| Wrap Technologies Inc. (WRAP) | 17.6% | 19.0% |
| Beyond Meat Inc. (BYND) | 37.9% | 254.1% |
*A high borrowing cost is an indicator of high short-seller demand.
Arca biopharma Inc. (ABIO)
Arca biopharma is a clinical-stage biopharmaceutical company that specializes in developing targeted therapies for cardiovascular diseases. The stock jumped in April 2024 after Arca announced a merger with Oruka Therapeutics, a private, clinical-stage biotech company focused on treating chronic skin diseases, including plaque psoriasis. The merger seems to represent a major pivot for Arca given the combined company will take the name Oruka Therapeutics, trade under the ticker ORKA and reportedly “focus on advancing Oruka’s pipeline of potentially best-in-class biologics.” Since the merger announcement, Arca’s short interest has ballooned to 101% of its float, or free-trading shares.
Torrid Holdings Inc. (CURV)
Torrid operates an e-commerce platform that specializes in women’s plus-size apparel and intimates, including tops, denim, activewear, footwear and accessories. Torrid shares have surged about 150% in the past year even as the company has reported quarter after quarter of falling revenue. Despite the recent rally, Torrid shares are still down about 64% from their $21 initial public offering in only about three years. Short sellers seemingly believe the rally will run out of steam, but some surprise sales growth numbers could ignite a major short squeeze. Ortex estimates 16% of Torrid’s float is held in short positions.
Pulse Biosciences Inc. (PLSE)
Pulse Biosciences is a health care equipment maker developing a proprietary oncolytic electroceutical therapy based on its proprietary Nano-Pulse Electro-Signaling technology. Eight years after Pulse’s 2016 initial public offering, the company is still reporting consistent net losses. Meanwhile, the stock’s share count has nearly quadrupled over the past seven years. In July, Pulse announced the U.S. Food and Drug Administration granted its Nanosecond Pulsed Field Ablation (nsPFA) technology Breakthrough Device Designation. Nevertheless, short sellers appear to be skeptical of the company’s technology and have targeted the stock. About 17% of Pulse’s float is held by short sellers.
Spirit Airlines Inc. (SAVE)
Spirit Airlines is one of the largest low-cost U.S. passenger airlines. The stock has tumbled about 82% in the past year, with much of the sell-off coming in January. On Jan. 16, a federal judge blocked a proposed $3.8 billion buyout of Spirit by JetBlue Airways Corp. (JBLU), citing antitrust concerns. Less than two months later, the airlines officially abandoned the merger deal. Without a merger partner, Spirit is left with tumbling revenues and heavy losses. Short sellers believe the stock will continue to lose altitude. Ortex estimates about 29% of Spirit’s float is held in short positions.
Luminar Technologies Inc. (LAZR)
Luminar Technologies is an electric vehicle technology company that went public via special-purpose acquisition company 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 about $1. Short sellers are focused on Luminar’s lackluster 2% revenue growth and its $81 million net loss in the second quarter. Ortex estimates 21% of Luminar’s float is held in short positions, suggesting short squeeze potential.
Capricor Therapeutics Inc. (CAPR)
Capricor Therapeutics is a clinical-stage biotechnology company focused on developing biologics to treat and prevent a wide range of diseases. Its lead product is deramiocel (CAP-1002), which is in late-stage clinical trials for treating Duchenne muscular dystrophy (DMD), the most severe form of muscular dystrophy. Capricor shares had a big run-up in early 2024 after the company said it’s scaling up to expand manufacturing capacity of deramiocel in anticipation of a potential FDA approval by the end of 2024. Short sellers may see the outlook as overly optimistic. Ortex estimates 23% of Capricor’s float is held in short positions.
B. Riley Financial Inc. (RILY)
B. Riley Financial is a financial services and solutions provider that provides capital markets, wealth management, financial consulting, auction and liquidation and consumer services. The stock is down about 75% in 2024 over concerns about an ongoing regulatory probe into the company’s risk management. In fact, short sellers have provided information to the U.S. Securities and Exchange Commission, prompting the SEC to expand its investigation into alleged financial irregularities at B. Riley. The company also recently suspended its dividend and guided for a massive second-quarter loss. B. Riley’s short interest is 77% of its float.
Wrap Technologies Inc. (WRAP)
Wrap Technologies is a public safety technology and services company that provides modern solutions to law enforcement and security personnel. The company’s patented BolaWrap remote restraint device discharges a Kevlar tether to temporarily restrain uncooperative suspects from a distance. In April, the company announced it had received a notice of non-compliance from Nasdaq for not filing its annual report on time. The company has since assured shareholders it is on track to get back on schedule with its financial filings, but short sellers often see accounting issues as a huge red flag. Wrap’s short interest is 17% of its float.
Beyond Meat Inc. (BYND)
Plant-based meat company Beyond Meat has had a disastrous few years. Beyond has reported consistently declining revenue, including another 8% year-over-year drop in revenue in the second quarter. The stock is down about 48% 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 industry. Beyond Meat’s short interest is 38% of its float, suggesting potential for a major short squeeze at some point.
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9 Short Squeeze Stocks That Could Take Off originally appeared on usnews.com
Update 08/19/24: This story was previously published at an earlier date and has been updated with new information.
