Potential short squeeze plays have gained steam in 2021 with an influx of new retail traders in the market.
A short squeeze can occur when a heavily shorted stock rises in value instead of falling. Short sellers could be looking to close out their position and can face a loss if they have to buy back the shares they initially borrowed at a higher price.
A squeeze can occur when short sellers are forced to buy in and cover their position, which has caused shares to go much higher on many occasions.
GameStop Corp GME and AMC Entertainment Holdings AMC are two high-profile examples of short squeezes earlier this year.
Fintel Data: Data from Fintel, which requires a subscription, provides a look at some of the top shorted stocks and the data that shows how likely a short squeeze is to happen.
Below is a look at the top five candidates for a short squeeze, according to the Fintel data.
Support.com: Cloud-based software company Support.com SPRT has seen shares surge as one of the top names mentioned as a short squeeze candidate.
Fintel said Support.com has been toward the top of its list for several weeks and enters the trading week with a short interest of 66.54% of the float. The borrow fee is 102%, which is on the expensive side and could lead to margin calls.
Support.com has a special meeting scheduled for Sept. 10 to approve a merger with Bitcoin BTC/USD miner Greenidge Generation Holdings. Support.com will own 8% of the new company if the merger is approved.
Last week, shares of SPRT went from $8.75 to $59.69 as traders bought into the short squeeze story. SPRT shares are trading at $37.88 at the time of writing.
Vinco Ventures: Well-known retail trader stock Vinco Ventures BBIG has been hitting new highs recently. The stock comes in with the second-best short squeeze potential score from Fintel. Vinco Ventures has 27.2% of its float short and a borrow fee rate of 62%.
Vinco Ventures shares went from $3 to $10 last week. BBIG shares trade at $9.31 at the time of writing.
Lightning eMotors: Commercial electric vehicle company Lightning eMotors ZEV is listed as a top short squeeze candidate by Fintel. The company, which went public via SPAC, has a short float of 34.6% and a borrow fee of 87.1%.
Shares of Lightning eMotors have spiked when the stock has been mentioned as a short squeeze candidate. Shares of the company also jumped in early August on news of securing a contract with the Berkshire Hathaway Inc BRKA BRKB-owned company Forest River.
A deal between the two companies could see Lightning eMotors awarded $850 million to produce 7,500 vehicles.
ZEV shares are trading at $7.73 at the time of writing, hitting a five-day high of $8.06 in pre-market trading.
Bit Mining: Cryptocurrency mining company Bit Mining BTCM has 17.9% of its float short and a borrow fee of 146%, ranking the stock fourth on Fintel’s list. The firm notes that the volume and share price of BTCM has been steadily rising over the last 30 days.
Bit Mining reported second-quarter earnings earlier this month and highlighted its Bitcoin mining, Ethereum mining and data center business. The company had second-quarter revenue of $445.1 million.
BTCM shares trade at $8.09 at the time of writing.
Mediaco Holding: Small-cap, low-float MediaCo Holding MDIA is fifth on Fintel’s list with a short float of 14% and a borrow rate of 106.5%. The company operates as a radio broadcasting company with several stations in the New York City market.
MediaCo has a market capitalization of $75 million, making it the smallest of the five names mentioned.
“Subtracting short interest from float leaves just 1.73 million shares, the lowest of all our candidates,” Fintel said.
MDIA shares have risen from the $6 range to the $9 range over the last week. Shares trade at $9.06 at the time of writing.
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