Potential short squeeze plays gained steam in 2021, with new retail traders looking for the next huge move.
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 into buying to cover their position, which can cause shares to move up higher on many occasions.
Fintel Data: Data from Fintel, which requires a subscription, provides a look at several of the top shorted stocks and data on how likely a short squeeze is to occur.
Here’s a look at Fintel’s top five short squeeze candidates for the week of May 30.
Redbox Entertainment: Movie rental and streaming company Redbox Entertainment RDBX tops the short squeeze leaderboard. The company is no stranger to the list, previously topping the list at the beginning of May. Fintel data shows that 180% of the company’s float is short. The cost to borrow on shares is a staggering 719.3%, one of the highest from Fintel data. The stock is likely to see a short squeeze in the short term before at takeover could see the price of shares eventually collapse. Chicken Soup for the Soul Entertainment CSSE agreed to acquire Redbox for 0.087 shares of CSSE for each Redbox share owned, making the deal worth $0.59 per Redbox share at the time of writing.
Better Therapeutics: Digital therapeutics company Better Therapeutics BTTX ranks second on the list and saw a rise of 2,759 positions on the short squeeze leaderboard. Fintel data shows 22.2% of the company’s float short and a cost to borrow of 130.7%, second highest on the leaderboard.
Eos Energy Enterprises: Battery storage solutions company Eos Energy Enterprises EOSE announced a SPAC merger to go public back in September 2020. The company has seen shares trade between $1 and $21.80 over the last 52-weeks with shares currently trading at $1.54. Fintel data shows 29.7% of the float short and a cost to borrow of 23.9%. The company moved up the leaderboard 21 positions over the last week.
Arcimoto: Three-wheeled electric vehicle company Arcimoto Inc FUV ranks fourth on the Fintel short squeeze leaderboard for the week. The company, which makes “fun utility vehicles”, moved up eight places for the week and has previously ranked in the top five on the leaderboard. Fintel data shows 39.9% of the float short and a cost to borrow of 65.1%.
GameStop Corp: Video game retailer GameStop Corp GME is no stranger to being a short squeeze candidate. The company was the target of a huge short squeeze in 2021 and the unlikely featured piece in a David vs. Goliath storyline that put retail traders against hedge funds. GameStop moves up 50 places to rank fifth on the Fintel short squeeze leaderboard. Data shows 23.8% of the float short and a cost to borrow of 50.0%. The company is set to report first quarter earnings Wednesday after market close. Analysts are expecting the company to post revenue of $1.32 billion for the first quarter, compared to $1.28 billion in the previous year’s first quarter, according to data from Benzinga Pro.
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