These stocks are primed for short squeezes.
There’s no question 2021 has been the year of the short squeeze. Groups of retail traders on Reddit and other social media platforms have successfully built targeted buying campaigns in a handful of the most heavily shorted stocks with the goal of triggering short squeezes. Short squeezes are large, short-term spikes in a stock’s share price that occur when a significant number of short sellers are forced to cover, or exit their positions by buying shares of the stock. Here are eight companies that have all the necessary ingredients to be the next huge short squeeze stocks, according to Ortex Analytics.
Big 5 Sporting Goods Corp. (ticker: BGFV)
Retailer Big 5 Sporting Goods has bounced back strong in 2021. The company rallied 77% in May alone on the strength of 31.8% first-quarter same-store sales growth. That momentum continued in the second quarter with another 31.3% jump in same-store sales. At this point, Big 5 shares are up about 250% in the past year and short sellers may believe the stock has become overheated. Ortex estimates that 49% of Big 5’s float, or free-trading shares, is held in short positions — the highest percentage of any stock on this list.
Apollo Medical Holdings Inc. (AMEH)
Apollo Medical is a health care management company that specializes in maximizing the efficiency of physicians, health plans and hospitals. The stock jumped nearly 17% back in June when it was added to the S&P SmallCap 600 index. Apollo shares are now up about 275% year to date, and much of those gains occurred after the inclusion in the small cap index. Short sellers are likely skeptical of the big run, which appears to be largely unrelated to Apollo’s business. Ortex estimates that 45% of the stock’s float is currently held in short positions, making it an excellent candidate for a short squeeze.
Gogo Inc. (GOGO)
Gogo specializes in internet connectivity in the aviation industry. Gogo shares are up more than 80% year to date, but much of those gains have come after the company raised its guidance on long-term revenue growth on Sept. 28. Gogo now projects 15% compound annual revenue growth from 2020 to 2025, a 50% increase from its previous growth guidance. Gogo’s short interest is 40% of its float, and short seller losses have been mounting. Gogo shares are up around 50% in the past three months. If the stock makes another move higher, a short squeeze could be just around the corner.
Altimeter Growth Corp. (AGC)
Altimeter Growth is another stock that is applying significant pressure to short sellers in recent weeks. Altimeter is a special-purpose acquisition company, or SPAC, that is set to merge with Southeast Asian mobility and financial services company Grab. The company allows its customers to use several different services within one app, such as food delivery, ride-hailing and e-wallet services. Altimeter has been popular among short sellers all year, but their short bets haven’t been paying off recently. AGC’s short interest has skyrocketed from 0.2% of its float at the beginning of 2021 to 37% of its float in early November.
Heron Therapeutics Inc. (HRTX)
Heron Therapeutics specializes in drugs that treat chemotherapy-induced vomiting and surgical pain. Heron shares are down more than 60% over the past three years. Sales of drugs like Cinvanti and Sustol have lagged behind expectations and the company’s acute pain medication Zynrelef didn’t initially receive as broad of a label as Heron had hoped. Fortunately for investors, Heron announced in October that it has filed for a “significant expansion” of Zynrelef’s approved uses. If the Food and Drug Administration approves the broader label, Heron shares could jump enough to force out short sellers. Heron’s short interest is 41% of its float.
Tattooed Chef Inc. (TTCF)
Tattooed Chef is a plant-based food company that went public via SPAC merger in 2020. The company has reported impressive growth numbers in recent quarters, but it’s struggling with profitability. The stock is down more than 20% year to date. However, Tattooed Chef demonstrated its short squeeze potential when the stock rallied from under $16 to around $25 in about two weeks starting in late August. The stock has since cooled down, but its short interest has risen from just 6% of its float in February to 39% today, setting the table for a potential squeeze.
Beyond Meat Inc. (BYND)
Plant-based meat company Beyond Meat has been a wild ride for short sellers since its high-profile initial public offering in 2019. After going public at an IPO price of $25, Beyond shares skyrocketed to an all-time high of $239.71 before the end of 2019. Two years later, the stock is now trading around $100 and has been the worst-performing stock on this list in the past year. Investors see massive growth potential, and short sellers see a stretched price-to-sales ratio of 14.5. Meanwhile, Beyond Meat’s short interest is 33% of its float.
Arcimoto Inc. (FUV)
Electric vehicle stocks have been popular targets for short sellers in 2021 after many of them experienced huge gains last year. Arcimoto was certainly a big 2020 winner, gaining 766% on the year. The stock is now down more than 60% from its 2021 highs and has been a home run for short sellers who timed the trade correctly. Arcimoto has one of the smallest floats on this list at just 29 million shares, creating the possibility for an extremely volatile short squeeze. Ortex estimates that 34% of the company’s float is currently held in short positions.
Short squeeze stocks that could take off in November:
— Big 5 Sporting Goods Corp. (BGFV)
— Apollo Medical Holdings Inc. (AMEH)
— Gogo Inc. (GOGO)
— Altimeter Growth Corp. (AGC)
— Heron Therapeutics Inc. (HRTX)
— Tattooed Chef Inc. (TTCF)
— Beyond Meat Inc. (BYND)
— Arcimoto Inc. (FUV)
