Market Overview

Nio, Peloton Among Analyst's Top Short Squeeze Candidates

Nio, Peloton Among Analyst's Top Short Squeeze Candidates

One of the most powerful tradable market events is a short squeeze, so traders are always on the lookout for the next short squeeze candidate. S3 Partners analyst Ihor Dusaniwsky just released a list of potential short squeeze stocks based on their high borrow rates and large mark-to-market losses for short sellers.

A stock borrow fee is the percentage of a stock’s value that brokers charge short sellers to borrow the stock. If the supply of shares to borrow gets low, borrow fees tend to rise.

“In my analysis I am looking at stocks with over $100 million of total short interest to include only stocks where the short covering from a squeeze can materially affect stock prices,” Dusaniwsky said.

When a stock’s borrow fees spike, it applies pressure to short sellers to choose between closing out their positions or letting fees eat into any potential gains.

Related Links: Apple Short Interest Jumps By $1.3B Ahead Of iPhone Event

Short Squeeze Candidates: Here’s a look at the 10 large-cap stocks with at least $100 million in short interest that have endured the largest short seller mark-to-market losses over the past month, according to S3 Partners. Month-to-date losses are included for each stock:

  • Cloudflare Inc (NYSE: NET), -52.3%
  • Nio Inc - ADR (NYSE: NIO), -38.2%
  • Peloton Interactive Inc (NASDAQ: PTON), -48%
  • Zoom Video Communications Inc (NASDAQ: ZM), -23.1%
  • Datadog Inc (NASDAQ: DDOG), -25.5%
  • Twilio Inc (NYSE: TWLO), -36.7%
  • Avalara Inc (NYSE: AVLR), -28.1%
  • Slack Technologies Inc (NYSE: WORK), -24.7%
  • Mercadolibre Inc (NASDAQ: MELI), -20.3%
  • Etsy Inc (NASDAQ: ETSY), -30.9%

Benzinga’s Take: Short squeezes are extremely unpredictable, and a rise in short seller losses is not a definitive indication that a squeeze is coming. However, the combination of high short interest and rising short seller losses makes these 10 stocks worthy of being at the top of any short squeeze watchlist.


Related Articles (AVLR + DDOG)

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