“Short squeeze” is surely one of the top buzzwords of 2021. Unprecedented rallies in GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) have set retail traders’ sights on stocks that have a high short interest. This style of investing is still gaining momentum — and it’s highly speculative — but the payoffs can be absolutely massive. Obviously, there are plenty of investors looking to take their chances with this potentially lucrative strategy. So with that in mind, what are some of the most highly shorted stocks now?
Short squeeze stocks aren’t a new thing, but this type of retail-driven investing is highly unusual.
Investors coordinate to buy stocks which are being heavily shorted. The goal is to inflate the price ahead of the expiration of the short sellers’ margin calls. If prices increase, rather than decrease, short sellers will have to buy stock back to limit losses, in turn sending prices up more. The result, if executed correctly, is a very fast increase in stock prices.
GameStop is the primary example of a short squeeze in 2021. Short sellers had targeted the brick-and-mortar retailer thanks to its old-school business model, debt and the Covid-19 pandemic. r/WallStreetBets rallied behind it, pushing its prices continually higher. GME stock is over 1,000% higher in the year to date.
Investors Seek Out Highly Shorted Stocks in Q3
Going into the third quarter, there are still a large number of institutions short-selling different stocks. According to S3 Partners, this is despite the losses short-sellers continue to face thanks to these coordinated squeezes. S3 says the “year-to-date net-of-financing mark-to market losses in the U.S. market are -$168.96 billion, a -15.45% on an average short interest of $1.09 trillion.”
The firm also said that 25% of the year’s short side losses occurred in the last 30 days alone, draining over $44 billion from short sellers.
Alongside these comments, S3 Partners is updating investors on the stocks with the highest short interest going into Q3. The list includes 12 different stocks, like Workhorse (NASDAQ:WKHS) and Clover Health (NASDAQ:CLOV), which both have huge followings on r/WallStreetBets. Roughly 34% of Workhorse’s float is short, while nearly 37% of Clover Health’s float is short.
10 Other Short Squeeze Targets to Watch
Also included are a number of electric vehicle stocks. This group is highly competitive, and such, institutions are betting on a lot of these names to fizzle out. Joining WKHS are four other EV stocks on the list. Arcimoto (NASDAQ:FUV) has 37.85% of its float sold short. Canoo (NASDAQ:GOEV) is seeing short interest of 26.83%. Nikola (NASDAQ:NKLA) and Blink Charging (NASDAQ:BLNK) have short interest of 13.26% and 30.78%, respectively.
Biotech and pharma companies are cooling off in the market as we move closer to a post-pandemic age. As such, Esperion Therapeutics (NASDAQ:ESPR) and Fulgent Genetics (NASDAQ:FLGT) are both on the list, with short interest of 44.66% and 28.52%. Rounding out the list are a ragtag group of other plays. SPAC Altimeter (NASDAQ:AGC) has a short percentage of 33.57%. Grocer Albertson’s (NYSE:ACI) makes the list with short interest of 10.84%. Advertising company PubMatic (NASDAQ:PUBM) appears with 31.89% of its float being sold short. Finally, in-flight internet provider Gogo (NASDAQ:GOGO) finishes the list with short interest of 13.07%.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
