Investors Increase Short Bets on Clean Energy and Biotech Stocks
The recent data reveals that the number of stocks with more than 20% of their outstanding shares sold short has reached the upper end of its historical range, surpassing levels seen during the meme stock craze in early 2021, as reported by Trivariate Research. Pro utilized FactSet data to identify companies most vulnerable to a short squeeze. This phenomenon occurs when a shorted stock experiences a significant price increase, causing investors who bet against the stock to buy back shares to limit their losses. This buying activity, known as short covering, further drives up the stock price.
The list below features companies listed on the New York Stock Exchange and Nasdaq with short interest accounting for more than 25% of their available shares for trading, and a market capitalization of at least $100 million as of July 14:
Companies Most Susceptible to a Short Squeeze:
- Carvana: Short interest declined by about 4%, but still remains at approximately 47% of available shares for trading. The online used-car seller’s stock has been volatile in recent months and has surged nearly 800% since the beginning of the year.
- C3.ai: Short interest in shares declined by 8.6% in the first half of July, although approximately 35% of its shares are sold short. This artificial intelligence stock has experienced a 250% increase this year as investors bet on the potential of the trending technology. Shares have gained nearly 8% for the month.
- Groupon: Short interest in this retail stock and clothing manufacturer Guess? has risen by 10% since the end of June.