5 Short Squeeze Stocks In Play Thursday: Nikola, Verve, Carvana, More

Wall Street speculators may be seeing the early stages of a potential short squeeze after some of the most heavily shorted stocks experienced massive price increases on Thursday.

Shares of Nikola Corp. NKLA, Verve Therapeutics, Inc. VERV, Carvana Co. CVNA, Zentalis Pharmaceuticals, Inc. ZNTL and C3.ai, Inc. AI all saw price gains of over 10% for the session.

With a short interest to equity float ratio of 15% to 45%, these five firms are among the most heavily shorted in the market.

What Is A Short Squeeze?

A “short squeeze” is a situation in which the price of a stock that is heavily shorted by the market rises substantially. This is usually caused by a mix of rising buying pressure and the need for traders who have shorted (sold borrowed shares) the stock to cover their positions.

Short squeezes can be particularly intense when there is a high level of short interest in a stock.

A quick jump in demand in the face of fewer available floating shares might lead to a supply shortfall, exacerbating the price increase.

Here are the typical steps of a short squeeze:

1. Shorting: Traders borrow shares from a broker and sell them in the market, as they expect the price to drop.
   
2. Price increase: If other market participants start buying the stock, this will in turn drive the price higher. Depending of the supply shortfall, this may generate a sharp surge in the price.
   
3. Margin calls: Short-sellers may experience margin calls from their broker if the stock price climbs. The trader must make additional deposits of cash or securities.
   
4. Cut losses: A short seller may end up to purchase back the shares they borrowed to cover their short positions and minimize further losses, generating a spike in the stock price.
   
5. Domino effect: Buying pressure from short sellers attempting to complete their positions can have a cascade effect, forcing other short sellers to buy back shares. This can generate an explosive effect in the stock price.

Read also: 10 Short Squeeze Stocks To Watch: Getty Images, Intuitive Machines, Wearable Devices & More

Today’s Short Squeezes In The Market: NKLA, VERV, CVNA, ZNTL And AI

Nikola Corporation (NKLA)

• Nikola Corp. is an electric vehicle company focused on developing hydrogen fuel cell and battery-electric trucks, with a vision to revolutionize the transportation industry.
• Nikola Corporation’s stock price skyrocketed 30% on Thursday, June 15.
• This marks the greatest single-day performance for the stock since Sept. 8, 2020.
• Koyfin data shows that there is a 15.8% short interest in Nikola Corp.
• NKLA is up 125% so far this month, but is still down 35% since the beginning of the year.

Chart: Nikola Corp.

Verve Therapeutics, Inc. (VERV)

• Verve Therapeutics is a biotech company dedicated to developing groundbreaking gene-editing therapies for the treatment and prevention of cardiovascular diseases.
• Verve Therapeutics’s stock price soared 16% on Thursday, June 15.
• This marks the best single-day performance for the stock since November 2022.
• Koyfin data shows that there is a 20% short interest in Verve Therapeutics.
• VERV is up 105% so far this month, but is only 2.2% higher since the beginning of the year.

Carvana Co. (CVNA)

• Carvana Co. is an e-commerce platform that enables consumers to buy and sell used cars online, offering a simplified and convenient car purchasing experience.
• Carvana’s stock price rose 15% on Thursday, June 15.
• Koyfin data shows that there is a 45% short interest in Carvana, making it the most-shorted stock in the Russell 1000 index.
• CVNA is up 108% so far this month, and 470% higher since the beginning of the year.

Zentalis Pharmaceuticals, Inc. (ZNTL)

• Zentalis Pharmaceuticals is a clinical-stage biopharmaceutical company engaged in the discovery and development of innovative small molecule therapies for the treatment of various types of cancer.
• Zentalis Pharmaceuticals’ stock price rose 14% on Thursday, June 15.
• This marks the greatest single-day performance for the stock in over a year.
• Koyfin data shows that there is a 20.7% short interest in Zentalis Pharmaceuticals.
• ZNTL is up 8% so far this month and by 39% since the beginning of the year.

C3.ai, Inc. (AI)

• C3.ai is a provider of artificial intelligence software solutions, leveraging big data, machine learning, and cloud computing to help organizations transform their operations and make data-driven decisions.
• C3.ai’ stock price rose 10% on Thursday, June 15.
• Koyfin data shows that there is a 28.4% short interest in C3.ai.
• AI is up 18% so far this month and by a staggering 321% since the beginning of the year.