This past year has been the time for short-squeeze stocks. No doubt, the advent of “meme stock” mania has done a lot to pique market interest in stocks carrying high short interest.
For example, trading platform Robinhood (NASDAQ:HOOD) has played a major part in exposing a large swathe of retail investors to the art of the short squeeze. Further, that retail movement has gained incredible momentum throughout the pandemic. Now it looks to be here to stay.
In fact, it’s fair to say that the investment landscape is undergoing a fundamental shift. Main Street and the retail investor have realized their collective, price-affecting strength. They’ve been clued in on the idea that stocks with high short interest are possible to manipulate as a group. Sell enough shares short and a short squeeze can follow. That sends prices soaring and can inspire huge returns.
Of course, it’s an absolutely risky strategy, but that’s the trade off. For every Gamestop (NYSE:GME) investor who got in early back in January, there’s a bunch of people who also bought at $300. The same is true for AMC (NYSE:AMC) and any other short-squeeze chase.
So, buyer beware. But for the risk-tolerant investor, there’s a lot out there to like. As such, we’re looking for short interest above 20% for this list. That traditionally signifies high short interest and thus the potential for a short squeeze.
Without further ado, let’s get into these seven short-squeeze stocks to watch.
- Ocugen (NASDAQ:OCGN)
- Senseonics (NYSEAMERICAN:SENS)
- Microstrategy (NASDAQ:MSTR)
- Workhorse (NASDAQ:WKHS)
- Kandi Technologies (NASDAQ:KNDI)
- Lordstown Motors (NASDAQ:RIDE)
- Clover Health (NASDAQ:CLOV)
Short-Squeeze Stocks to Watch: Ocugen (OCGN)
Ocugen is a company which, prior to the onset of the pandemic, was in the business of commercializing therapeutics for rare eye diseases. Then in late December, OCGN announced that it had signed a letter of intent to co-develop Bharat Biotech’s Covaxin vaccine for the U.S. market. That sent the OCGN stock price up from the 20-cent range to $2 practically overnight.
A few weeks later, in February, Ocugen finalized the deal and sent shares skyward again. That period would signify one of two peaks during which OCGN stock would eclipse $15 per share. In early May, data suggesting Covaxin could protect against a Brazil-based variant of Covid-19 spiked prices above $15 again.
That’s been the Ocugen investment story through 2021. So, as you may be able to tell, it wouldn’t be hyperbole to suggest it’s practically impossible to predict where OCGN is heading next in terms of price.
However, based on the stock’s short interest, it is implied that the market believes OCGN’s best days are long gone. OCGN stock currently carries short interest of 27.03%. That clearly indicates many investors are willing to bet against the company.
On the one hand, there’s plenty of evidence to suggest that this pick of the short-squeeze stocks will never get clearance to market Covaxin in the States. Yet, on the other hand, the pandemic keeps rearing its ugly head. In my view, then, there’s potential for commercialization at a later date.
Senseonics has the potential to rise for two important reasons. First, it carries high short interest like all of the other short-squeeze stocks on this list. In fact, its current level of short interest sits at 27.36%, according to the Wall Street Journal. That’s well within traditional short-squeeze territory.
Secondly, though, Senseonics may end up commercializing a revolutionary technology in a booming market. That’s because SENS claims to have created the first and only long-term implantable continuous glucose monitor (CGM). Last month, the company released study data relating to its Eversense CGM System at an American Diabetes Association conference. According to the associated press release:
“The Company presented previously released information demonstrating performance matching that of the current 90-day sensor available in the United States, with reduced calibration, down to one per day, with duration extended to 180 days.”
If the Eversense CGM System is granted U.S. Food and Drug Administration (FDA) approval, it stands to reason that doctors and diabetes patients would be very interested, given the 180-day range. Eliminating the constant finger-prick blood tests is clearly a powerful selling point.
SENS stock is a typical biotech stock in most senses. It will be hit or miss. But it’s also difficult to understand why SENS in particular has been receiving so much short interest. Nothing suggests that its failure is imminent. In any case, Senseonics has powerful catalysts, both of which could pull it higher.
Short-Squeeze Stocks to Watch: Microstrategy (MSTR)
Next up on this list of short-squeeze stocks, Microstrategy is a business intelligence firm that provides enterprise analytics solutions to clients across multiple industries. Currently, it also carries a market capitalization above $6 billion. So, at first blush, it may not seem to be a typical short-squeeze target.
The company released earnings on Jul. 29 which indicated issues, but perhaps not enough trouble to warrant 27.2% short interest. Well, that is if you simply give a cursory glance to its financial statements.
After all, Microstrategy revenues increased 13.4% to $125.4 million in the second quarter on a year-over-year (YOY) basis. And, for the first half of 2021, MSTR certainly showed improvement as well; both revenues and profits increased substantially.
What gives then? The problem with MSTR stock lies in the company’s dual focus on growing its analytics business and acquiring Bitcoin (CCC:BTC-USD). Microstrategy is noted for its treasury purchases of the crypto and CEO Michael Saylor is a big proponent of digital currency.
The company went big into Bitcoin and ended up paying for it. Microstrategy ended up eating a loss in the first half of this year. Its 10-Q filing tells the story well: “During the three and six months ended June 30, 2021, the Company incurred $424.8 million and $618.9 million, respectively, of impairment losses on its bitcoin.”
Workhorse is among the most highly shorted stocks, with 35.81% of its float sold short. That lands it squarely on this list of short-squeeze stocks. Why are so many are keen to bet against this commercial electric vehicle (EV) manufacturer? Well, the negativity around WKHS stock stems from the U.S. Postal Service’s (USPS) recent next-generation delivery vehicle award.
By now, most readers are probably aware that Workhorse — long considered a favorite to win the USPS contract — ultimately faltered. Instead, Oshkosh (NYSE:OSK) proved victorious, receiving the award news in late February. The contract came with an initial value of $482 million and calls for Oshkosh to manufacture between 50,000 and 165,000 new vehicles delivered over a 10-year period.
However, Workhorse is not going to simply roll over and accept the USPS contract results. Instead, the EV company continues to argue that the award should be reversed in its favor. The company filed a complaint in the United States Federal Court of Claims back in June, so the fight is on. The argument will likely pivot on how the contract could be awarded to Oshkosh given the postal service’s previous EV aspirations.
Short-Squeeze Stocks to Watch: Kandi Technologies (KNDI)
Next up on this list of short-squeeze stocks is Kandi, a lesser-known Chinese EV manufacturer attempting to establish a market in the United States. Basically, KNDI stock was the benefactor of some interest in late 2020, when all things EV were significantly hotter. Back then, share prices doubled to the $15 range. Now, though, they have quickly fallen off. Today, its short interest is right at 20.58%.
The company announced retail financing options for the U.S. market in early July, but it’s difficult to imagine a big market for its vehicles.
Kandi actually has quite a long history in the States. The company’s first vehicle — the Coco — was actually exported to the U.S. market back in 2009. It wasn’t commercially successful, but does remain an interesting side note in EV history. The Coco could be purchased for under $1,000 in Oklahoma at that time, due to a combination of state and federal rebates and credits that were then available.
Now, KNDI is marketing itself as a cutting-edge EV company, attempting to seize an opportunity that looks to have already passed it by. Further, as I wrote earlier this year, this name can hardly be considered an EV company based on sales. Back then, I noted that “Kandi Technologies sold $40.6 million of EV parts throughout 2020. However, it sold a much more modest $700,000 worth of EVs. In fact, Kandi sold $29.8 million in off-road vehicles, outpacing EV products by 42x.”
So, KNDI stock remains interesting to watch, but it’s also easy to understand why so many are willing to bet against it.
Lordstown Motors (RIDE)
Lordstown Motors has been on a rollercoaster ride over the last year. A cursory glance at the RIDE stock price chart for the period quickly tells as much.
This name was one of the higher-profile blank-check-company-funded EV upstarts of 2020. As a special purpose acquisition company (SPAC) target, it received a lot of media attention, making loads of headlines promising a Rust-Belt renaissance fueled by Lordstown and the EV industry.
No doubt, this pick of the short-squeeze stocks seemed to have a bright future ahead of it. Last year, the company was quick to note its 27,000 advance preorders. However, fast forward a little and the company now looks like a sinking ship.
So far, Lordstown Motors has received two subpoenas from the U.S. Securities and Exchange Commission (SEC) related to its preorders and the manner in which executives promoted them. As a result, CEO Steve Burns has resigned. Further, the company announced back in mid-July that the Justice Department is “probing its business” as well.
This all leaves little surprise as to why RIDE stock’s short interest is currently at 28.69%.
Short-Squeeze Stocks to Watch: Clover Health (CLOV)
Clover Health is one of many SPACs brought to market by the so-called SPAC king, Chamath Palihapitiya. Of course, Palihapitiya is a controversial character, but Clover Health is actually among his most controversial companies.
I’ve written about this pick of the short-squeeze stocks multiple times before. Basically, I just don’t find it to be a compelling investment. Put simply, its problems seem to be compounding rather than relenting.
For example, Clover’s CFO is leaving the company, which rarely signifies anything positive to the market. Earlier in the year, the company also failed to disclose that it was under investigation by the Department of Justice. All of this information has been well-summarized by fellow biedexmarkets.com contributor Ian Bezek in his recent write-up.
True, short-squeeze potential may be lessening in CLOV stock. But in today’s volatile markets, things can change on a dime. Today, its short interest is at 21.39%.
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On the date of publication, Alex Sirois 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 biedexmarkets.com.com Publishing Guidelines.
Alex Sirois is a freelance contributor to biedexmarkets.com whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.