Short-squeeze stocks are attractive because they can offer high short-term returns. However, this strategy can also be risky as there is no guarantee that the stock will rise in value or not.

The short squeeze occurs when the stock price rises rapidly after a short sale and forces investors to buy back shares at higher prices than what they originally sold them for. The increase in share price may lead to losses for those who sell their shares before the squeeze happens.

Usually, short-squeeze stocks are not something you want in your portfolio. However, due to the Reddit crowd, they are becoming an important investment tool. Therefore, you cannot keep the following five stocks out of mind when crafting your investment portfolio.

Ticker	Company	Current Price
FUV	Arcimoto, Inc.	$3.38
NKLA	Nikola Corporation	$5.66
UPST	Upstart Holdings, Inc.	$34.99
BYND	Beyond Meat, Inc.	$25.56
LMND	Lemonade, Inc.	$17.70

Arcimoto (FUV)

Electric vehicles have been on the rise for quite some time now. The popularity of these vehicles has increased significantly in recent years, with more people opting to purchase an EV.

Electric vehicles are not only a great alternative to conventional gasoline-fueled cars but also a significant way to combat climate change and reduce greenhouse gas emissions. They are also cheaper than hybrid cars and can help you save money on gas costs in the long run.

Several EV companies have come to the fore to take advantage of the total addressable market (TAM). The most prominent, of course, is Tesla (NASDAQ:TSLA). However, other companies are offering a curveball way to invest in the sector.

Arcimoto (NASDAQ:FUV) is a company in Eugene, Oregon, that makes and sells two-seat, three-wheeled electric vehicles called the FUV. They also have “Rapid Responder” and “Deliverator” if you need a cargo van. InvestorPlace market analyst Joanna Makris had a really interesting fireside chat with the company’s CEO, Mark Frohnmayer. Check it out for further information on Arcimoto.

However, while the business model is unique, commercialization will take time. Plus, EV stocks have been down substantially in the last six months. People are cooling off from these companies and are retreating to safer pastures. In this environment, FUV stock becomes particularly risky. Therefore, the company’s high short percentage — 42% as of this morning — should not surprise anyone.

Nikola (NKLA)

Nikola Corporation (NASDAQ:NKLA) is an American company developing high-performance commercial batteries and fuel cells. They are also developing solutions for renewable energy production.

Hybrid fuel cell technology is a new type of clean energy that offers a more sustainable and cost-effective alternative to traditional fossil fuels.

The fuel cells are powered by hydrogen, which is created by combining water with electricity from renewable sources such as wind or solar power. The hydrogen then powers the engine, creating a zero-emission vehicle that emits no pollutants into the air and only water vapor as its exhaust.

The future of hybrid fuel cells lies in their ability to provide cleaner energy without compromising performance or affordability.

At the moment, the company is not profitable. The company reported that the net loss widened in this latest quarter. It’s $79.15 million, or 37 cents a share, much higher than the earnings per share of $53.43 million in the year-ago period, which is 31 cents per share. However, revenues jumped to $1.89 million, compared with zero a year ago.

EV stocks have largely been shunned this year, but this company seems to be suffering more than most. That is why you will find this company on the list of short-squeeze stocks.

Upstart Holdings (UPST)

Upstart Holdings, Inc. (NASDAQ:UPST) is a company that provides loans to consumers and businesses in the United States. They are one of a myriad of entrepreneurial fintechs that use artificial intelligence to assess the credit worthiness of borrowers.

As academic Fadi Sakka wrote in a piece for the journal Cogent Economics & Finance, “the unique features of AI models, coupled with the expansion of computing power, make new sources of information (big data) available for creditworthiness assessments.”

The investors on Reddit are largely tech-savvy people who love to invest in early-stage companies that have the potential to grow. Investors on Reddit also tend to be risk-takers, meaning they are more likely to invest in risky stocks than traditional investors like mutual funds or pension funds.

Therefore, UPST stock fits the profile of Reddit investors. It is growing rapidly; earnings and revenues increased by 154.21% and 223.62% in the latest quarter. The company’s net profit margin, which is a key determinant of success, was 10.51%. It gained 27.39% over the previous year. Hence, among short-squeeze stocks, it is one of the better prospects.

Beyond Meat (BYND)

Beyond Meat, Inc. (NASDAQ:BYND) was began selling its products in 2009. It is now one of the fastest-growing food companies in America, with global sales surpassing $464.7 million last year.

Beyond Meat’s products are made from plants and proteins extracted from peas, soybeans, wheat, and other grains — not animals — which means they are vegan-friendly. Most are also kosher and halal certified.

Despite Beyond Meat’s unique business proposition, its stock price has declined. There are several factors to blame here apart from the general market downturn. Beyond has had a tough time recently in terms of profits. Sales have been dropping over the last nine months due to softening demand and the supply chain issues brought about by the pandemic.

Hence, it makes sense that short sellers are interested in BYND stock.

Lemonade (LMND)

Lemonade, Inc. (NYSE:LMND) is a company that uses artificial intelligence to help its customers find the right insurance. It also helps them in terms of finding the right type of insurance.

Artificial intelligence tools are gradually making their way into the insurance industry. This is because they help companies save money and provide better customer service.

Lemonade uses artificial intelligence to provide customers with more personalized insurance plans that fit their needs. It’s main difference is how it has married big data and insurance to gather more information than ever before. The company is breaking the mold in a sector dominated by companies that still use a traditional business model. The number of fields you typically see on home insurance forms is usually limited to 40, but Lemonade manages to gather 100 times more information.

Last year, though, was full of missteps from the company. Lemonade posted a huge loss ratio in the last year’s first quarter after the Texas freeze, which caused tremendous damage to their biggest market. In addition, the investor community wasn’t too enthused with the purchase of MetroMile, a San Francisco-based technology company focusing on the auto sector.

On the publication date, Faizan Farooque 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.