Tag: GME

How to Spot Potential Short Squeeze Opportunities on the NASDAQ

Ever found yourself shorting a stock only to see a sudden spike, prompting an urgent need to cover your position as soon as possible?

What happened was called a Short Squeeze. Even the most seasoned traders have experienced this phenomenon. But do they really know what happened? 

A short squeeze happens when a heavily shorted stock has a shape increase in buying volume causing short sellers to close out their positions, which drives the prices higher from the covers. As you have read in a previous article about NYSE Squeezes, NASDAQ is home to many short squeezes as well. 

The most famously known NASDAQ short squeeze is GameStop (GME) in 2021. GameStock is a brick and mortar gaming merchandise retailer that had declining sales, which caused investors to heavily short the stock. GameStop had more shares sold short than the total number of shares available for trading (a situation known as a “short interest”). 

A group of retail investors on the Reddit forum r/WallStreetBets noticed that GameStop was heavily shorted and began buying the stock which started driving up the stock price. As the aggressive buying started to surge, this put pressure on the short sellers to cover their positions (buying back at higher prices to limit the losses). 

The unprecedented surge in GameStop’s stock price caused extreme volatility and attracted widespread media attention. The GameStop short squeeze had significant repercussions in the financial markets, leading to losses for some hedge funds that had heavily shorted the stock and prompting scrutiny from regulators and lawmakers. It also sparked a broader interest in retail trading and the democratization of investing. 

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float refers to the proportion of shares held short divided by the total float, where the float represents freely tradable shares. A short percentage exceeding 10% to 20% is typically regarded as high and may indicate potential short squeeze opportunities.

The Short Ratio, also known as Days to Cover or Short Interest Ratio, is a crucial metric in identifying potential short squeeze opportunities. It represents the number of days it would take for short sellers to buy back their positions based on the average daily trading volume of shares. This ratio is significant because it indicates the level of difficulty short sellers face when attempting to cover their positions without significantly impacting the stock price. However, for short sellers, a higher number of days to cover implies a greater and more prolonged squeeze, increasing their potential losses.

Short Percentage Increase refers to the percentage growth in the number of short sellers compared to the preceding month.

The following are some heavily shorted NASDAQ stocks that may be worth considering for a short squeeze.

CompanyCompany SymbolShort InterestShort % ChangeShort Interest Ratio
Novavax IncNVAX41.58%5%6.4
Beyond Meat IncBYND37.86%1%7.8
Immunitybio IncIBRX36.07%7%11.4
Upstart Holdings IncUPST35.63%-11%2.6
Luminar Technologies IncLAZR35.28%13%11.6
Prime Medicine IncPRME34.06%-7%3.9
Blink Charging CoBLNK32.27%-1%2.3

The first stock on the list, Novavax Inc (NVAX) has over 41% of its float shorted, an increase of 5% over last month. The short interest ratio is 6.4, which means that it would take the short sellers over six days to cover their position, based on recent average volume. Take a look at the chart below, you can see increased volume in the past few days…

The second stock on the list, Beyond Meat Inc. (BYND) has over 37% of its float shorted, an increase of 1% over last month. The short interest ratio is 7.8, which means that it would take the short sellers over seven days to cover their position, based on recent average volume. As you can see here, it looks like BYND may have been squeezed.

The last stock on the list, Blink Charging Co. (BLNK) has over 32% of its float shorted, an decrease of 1% over last month. The short interest ratio is 2.3, which means that it would take the short sellers over two days to cover their positions, based on recent average volume. 

Although a stock may exhibit favorable ratios and attract significant short interest, it’s crucial to recognize that these factors alone do not guarantee an upward movement in its price, particularly in a bear market. Additionally, high levels of short interest in a stock could signal underlying issues or concerns that have prompted investors to bet against its performance.

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Disclosure: Author had no positions in any of the above at the time the article was written.

5 Stocks with Short Interest Over 40%: Possible Short Squeeze Plays

by Fred Fuld III

Did you know that at one point, GameStop (GME), the high flying meme stock, had 140% of its total outstanding shares shorted, according to the book, The Antisocial Network (now republished as Dumb Money).

It is possible for a stock to have a short interest exceeding 100% of its outstanding shares. However, this is relatively rare and can occur due to several factors:

1. Naked Short Selling: This illegal practice involves selling borrowed shares without first locating them. While most brokers have safeguards to prevent naked short selling, it can still happen, especially with less-regulated stocks. In such cases, the number of shorted shares can temporarily exceed the number of outstanding shares.

2. Share Lending and Relending: When shares are borrowed for short selling, they can be re-lent to other short sellers multiple times. This can create a situation where the total number of shorted shares appears to be more than the number of outstanding shares, even though no naked short selling has occurred.

3. Synthetic Short Positions: These positions involve using derivatives like options or futures contracts to mimic the effect of short selling. While not directly borrowing shares, these positions can still contribute to the overall short interest and push it above 100%.

It is probably the lending and relending that contributed the most to GameStop short interest going over 100%.

A short squeeze is a phenomenon that occurs in financial markets when investors who have sold shares of a stock short (i.e., betting that the stock price will fall) are forced to buy those shares back at a higher price than they expected. This can happen when the stock’s price rises sharply, causing losses for short sellers who need to buy the stock to cover their position and limit their losses.

As more and more short sellers try to buy the stock to close out their positions, this increased buying activity can drive the stock price even higher, creating a feedback loop that can lead to a rapid and dramatic increase in price. This can create a challenging situation for short sellers, who may be forced to buy back the stock at a loss, or risk even greater losses if the stock continues to rise. A short squeeze can also create opportunities for long investors who have purchased the stock, as they may be able to sell their shares at a higher price to short sellers looking to cover their positions.

When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.

Short sellers can be profitable, but sometimes when the stock moves against them, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.

Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.

Short Percentage Increase/Decrease ~ This is the percentage increase in in the number of short sellers from the previous month.

The following are some heavily shorted stocks that have short interest above 40%.

CompanySymbolShort InterestFloatOutstdS. I. Ratio% chg from prev month
Fisker IncFSR47.28%199.17M218.20M4.54%
Novavax IncNVAX43.94%111.96M118.79M6.58%
Upstart Holdings IncUPST41.91%72.37M85.06M3.5-1%
Beyond Meat IncBYND40.09%60.86M64.54M8.2-5%
Carvana CoCVNA40.04%94.11M106.54M4.38%

The second stock on the list, Novavax (NVAX) has almost 44% of its float shorted, with an 8% increase in short interest over last month.

The short interest ratio is 6.5, which means that it would take the short sellers over six days to cover their position, based on recent average volume.

Just keep in mind that just because a stock has good short interest ratios and is heavily shorted, doesn’t mean that the stock will go up, especially in a bear market.

In addition, the short positions and other data can change at any time.

Also, stocks that are significantly shorted may up being just lemons.

Disclosure: Author didn’t own any of the above at the time the article was written.

DIAMOND HANDS: THE LEGEND OF WALLSTREETBETS

MSNBC Films and NBC News Studios will premiere “Diamond Hands: The Legend of WallStreetBets”

on MSNBC Sunday, April 10 at 10:00 p.m. ET and will be available to stream this spring on Peacock 

The Broadcast Debut Follows the Global Premiere at SXSW Festival

———————————————————-

DIAMOND HANDS: THE LEGEND OF WALLSTREETBETS 

https://www.msnbc.com/msnbc/watch/diamond-hands-the-legend-of-wallstreetbets-teaser-135194693826

“Diamond Hands: The Legend of WallStreetBets”, directed by Zack Canepari and Drea Cooper, gives an edgy, inside look at the GameStop downfall and features a number of analysts and investors like Mike Novogratz and Andrew Left; and retail investors Jeff Amazon, Sir Jackalot and Alisha Woods, all who help connect the dots for the events that played a major role in the craze that rocked the stock market a year ago.

Directed by Zack Canepari & Drea Cooper, Executive Produced by Amanda Spain (VP, Longform Acquisitions MSNBC)

MSNBC Films and NBC News Studios will premiere “Diamond Hands: The Legend of WallStreetBets,” on MSNBC Sunday, April 10 at 10:00 p.m. ET, following the global premiere at SXSW on March 13.

Diamond Hands was coined by traders within the social media community of Reddit’s r/WallStreetBets.  On this subreddit, where users post stock and option trading, the term caught on specifically when r/WallStreetBets initiated a short squeeze on GameStop last January. Directed by Zack Canepari and Drea Cooper, the doc features a number of analysts and investors like Mike Novogratz, Andrew Left and retail investor Alisha Woods and Reddit users who go by “Jeff Amazon” and “Sir Jackalot.” They all  help connect the dots for the events that played a major role in the craze that rocked the stock market a year ago. “Diamond Hands” is produced by NBC News Studios and ZCDC Films. The film is set to stream later this Spring on Peacock.

The documentary explores the collective jaw-drop when GameStop shares soared 1700% in January 2021. Major hedge funds and other investors were so sure that the 90s-era, mall-based retailer was doomed that the size of the bet against the company was 140 percent the size of the company itself. r/WallStreetBets became so much more than a subreddit where participants discussed stock and option trading, quickly becoming notable for its aggressive trading strategies, colorful and profane jargon. r/WallStreetBets turned into a subculture with its own language, its own moral compass and a value system that thrives on gamesmanship and sowing chaos at every turn.

“This film and its subjects are irreverent, witty and at the same time incredibly informative. This film gives a front row seat to the younger generations’ world view and their attempt to change financial institutions they feel were never meant for them,” said Amanda Spain, VP of Longform Acquisitions, MSNBC Films. “I am inspired by their willingness to hold up their middle finger to the status quo and their relentless fight to change the system.”

“The decision to make “Diamond Hands” was an easy “bet” for us,” said Liz Cole, president of NBC News Studios. “While most people followed the wild ride of GameStop’s stock a year ago, this film explores the fascinating human stories behind those headlines and gets at the generational frustration that led so many people to rebel against the system. Zack and Drea were dream partners in crafting the distinct tone of this film, and we’re thrilled to show it to the world at South by Southwest next month on MSNBC in April and later on Peacock.”

MSNBC recently revitalized its long form programming under the banner MSNBC Films led by Amanda Spain, Vice President, Longform Acquisition. In 2021, MSNBC Films’ broadcast premiere of Memory Box: Echoes of 9/11, a co-production of Yard 44 and NBC News Studios production, drew more viewers than any other 9/11 documentaries in September 2021. MSNBC Films also acquired acclaimed French artist JR’s Paper & Glue and the short documentary, Seth Freed Wessler’s “The Facility,” which was on the 2022 Oscar shortlist. Most recently, MSNBC Films aired “Love & The Constitution,” about representative Jamie Raskin, which premiered on MSNBC February 6th.

“Diamond Hands: The Legend of WallStreetBets” is an NBC News Studios & ZCDC production, Produced and Directed by Zack Canepari and Drea Cooper; Produced by Gary Kout and Myles Estey, Molly O’Brien; Co-Produced by Erica Fink; Consulting Producer Stephanie Ruhle, Associate Producer Nick McElroy; Edited by Carter Gunn, Drea Cooper, Sebastian Hernandez; Director of Photography Megan Stacey;’ Composer Matt Joynt. Executive Produced for MSNBC Films by Rashida Jones and Amanda Spain. Executive Produced for NBC News Studios by Elizabeth Fischer, Molly O’Brien, Andy Berg, Liz Cole and Noah Oppenheim.

How Did the Meme Stocks Do Last Year? Here’s How

by Fred Fuld III

About a week ago, I heard an analyst on CNBC being interviewed about meme stocks, although he didn’t pronounce it “meeem”, he pronounced it “me-me”. Do you think it was accidental, through ignorance, or on purpose with a hidden meaning?

Whatever you call them, the meme stocks have had a wild ride last year. Surprisingly, a few of them performed extremely well, but many ended up dropping over 40% for the year.

Interestingly, the top performers were GameStock, I mean GameStop (GME) (did I type it that way accidentally or on purpose?), up 688%, and AMC Entertainment (AMC), which rose by 1183%.

The memes that tanked the most were Clovis (CLOV) down 78% and ContextLogic Inc. (WISH), which dropped by 83%.

The following is a list of the meme stocks and semi-meme stocks along with the January 1 to December 31 performance for the year 2021.

GME 688%
AMC 1183%
CLOV -78%
CRON -43%
DASH 4%
FVRR -42%
HOOD -49%
IQ -74%
OTLY -61%
WE -27%
WISH -83%
BB 41%
SNDL 22%
BYND -48%
SLV -12%

Maybe we will see some meme action again this year. What do you think?

 

Disclosure: Author owns SLV and HOOD.

Heavily Shorted Debt Free Stocks

by Fred Fuld III

Many of the meme stocks, such as GameStop (GME) and AMC (AMC), have shot up in price several times because of the fact that they have been heavily shorted and subject to a short squeeze.

So if you are looking for other heavily shorted stocks, you might want to check out the stocks which have a large portion of their float shorted, and in addition, have low or no debt. If a company has no debt, it is hard for them to go out of business.

Here is a review of the short squeeze and its terminology. When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.

Short selling can be profitable, but sometimes when the stock moves against the short sellers, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.

Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.

Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.

Check out the following list, but be aware, that often some stocks are heavily shorted for a reason. All these stocks have significant short metrics.

Big 5 Sporting Goods (BGFV) has over 45% of its float shorted and no long term debt. The percentage shorted has increased by 15% over last month. In addition, the stock has a short interest ratio, also known as a Days to Cover Ratio, of 5.9. This means that it would take almost six days for short sellers to cover their position, based on recent volume. The stock trades at 5.5 times trailing earnings. It is a sporting goods retailer in the western United States.

OppFi Inc. (OPFI) has 12.3$ of its float shorted. The short entered has had a one month increase of 6% and a short interest ratio of 4.4. The company operates a financial technology platform.

Sunlight Financial Holdings (SUNL) is another debt free company that has over 10% of of its float shorted. The percentage shorted has increased by 9% over last month. Plus, the stock has a short interest ratio of 6.0. The company provides a financing platform for solar installation.

Happy squeezing!

Robinhood Investors Getting Rich

by Fred Fuld III

Last Thursday, Robinhood (HOOD) went public at an IPO price of $38 per share. The stock sold off a little that first day, but today, the stock reached a price per share of $85 shortly after the stock market opened.

This works out to a 123% gain in one week. Not too shabby for a recent IPO.

Even if you had waited until yesterday to buy the stock on the close at $48.50, the gain would be 75%.

Robinhood has almost turned into a meme stock, not due to a short squeeze but do to the popularity of the stock, as it has garnered much attention on Reddit.

Options started trading on the stock today, and the volume and activity is huge. The strike prices range from 20 to 95 for all expirations from August to January of next year. Will higher strikes need to be added? Who knows? Maybe even lower strikes.

The August implied volatility is over 200% and September is in excess of 170%.

It will be interesting to see if Robinhood turns into another GameStop (GME) or AMC (AMC), or if it takes you for a RIDE.

 

Disclosure: Author owns two shares of HOOD.

 

 

Weirdest Wall Street Stuff on Amazon

by Fred Fuld III

Are you looking for a great joke gift for a stock trader friend? Or maybe just a funny gift for your father who likes to invest, and you need to come up with a present for Father’s Day. Then again, you could just be looking for something for yourself to prove what a great trader or investor you are.

If so, there is a great selection of unusual  items on Amazon related to investing and the stock market. Here is an interesting list of the out-of-the-ordinary.

Rocket Ship WSB Wall Street Bets Stock Market T-Shirt

If you made money on GameStop (GME), why not show it off with this attention getting WallStreetBets To the Moon T-Shirt.

 

Wolf of Wall Street Poster

Here’s an unusual one. A framable quote from Jordan Belfort, the Wolf of Wall Street.

 

Miniature ATM

All right, it’s not a real ATM. It’s basically a kid’s piggy bank, but instead of being in the shape of a pig, it is in the shape of a bank vault with keypads and everything. A unique gift for a child.

Stock Market Decision Maker

If you can’t figure out which way the stock market is going, check out this desk paperweight stock market decision maker that might just tell you whether to buy, sell, short, hold, and so on. Makes a great icebreaker for visitors to your office.

 

Are you made of money?

People might think so if they look below your pant cuffs and see socks with money raining down.


Show that You’re the Godfather of Stocks

If your father trades stocks, this might be the perfect Fathers Day gift, a T-shirt that says The Stocksfather.

 


COVID Stock Market Chart

Now here’s a chart that you won’t see every day. A graph of the SPY from December 2019 to May 2020, showing the Coronavirus Crash.

 


Show the World that you Trade While You Drive

This is a chrome plastic license plate frame that proclaims that you would much rather be watching the stock market.

 

Thank You AMC Stonk to The Moon Stickers

Here are three stickers for those that made money from  AMC (AMC). Put them on your laptop, your front door, your car, your water bottle, your face, or wherever.

 


Are You a Stock Market Genius?

This Stock Market Genius coffee mug is great for braggarts.

 

What Guy Wouldn’t want a Throw Pillow?

This is a Buy the Fear, Sell the Greed throw pillow, great for punching or throwing if you make a trading mistake.

 

Bull and Bear Bronze Statue with a Twist

You have probably seen several of this statues showing a bull and a bear. This one is a little different. The bull is goring the bear, and look at the bear’s expression.

Hopefully you can find some great unusual, weird, strange, investment related gifts for yourself, family, and friends.

 

 

 

This article and page contains affiliate links.

Top Low Priced Short Squeeze Stocks

by Fred Fuld III

Unless you haven’t paid any attention to financial news at all, you probably already know that GameStop (GME) has gone up over 700% in the last five days. The movie theater chain, AMC (AMC) was available for a little over two bucks ten days ago. Today, it traded for 25.80 this morning in pre-market trading.

You also probably know that these huge gains have been caused by short squeezes.  Back on September 18 last year, I published an article called Top Restaurant Short Squeeze Stocks, and it listed four companies that were heavily shorted. In just the last four months, those stocks have had stellar returns.

The worst performing stock was up 38%. Not a bad return for four months. The best performing was Dave & Busters (PLAY), which was up 138%. Here are those four stocks, with the percent of float shorted at the time, the days to cover at the time, and the return if you had bought the stock back then and sold today.

Stock Symbol % of Float Days to Cover % Gain
Shake Shack SHAK 26% 5.7 85%
Dave & Buster’s PLAY 33% 1.8 136%
Red Robin RRGB 35% 3.4 64%
El Pollo Loco LOCO 19% 11.2 38%

Many of the heavily shorted stocks you have seen on the news during the last couple days are high priced, with a majority of them trading over $100 a share. That’s a lot of risk. So If you are looking for low priced stocks that might be short squeeze plays, I will cover that shortly.

But first, a review about the short squeeze and its terminology. When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.

Short selling can be profitable, but sometimes when the stock moves against the short sellers, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.

Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.

Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.

Check out the following list, but be aware, that often some stocks are heavily shorted for a reason. All these stocks have significant short metrics.

Stock Symbol % of Float Days to Cover Stock Price
Ayro AYRO 23.28% 0.51 7.24
Clovis Oncology CLVS 42.43% 6.54 7.94
Senseonics SENS 30.95% 1.36 2.51
TherapeuticsMD TXMD 28.89% 14.30 1.59
VBI Vaccines VBIV 25.64% 6.62 3.15

So as an example, VBI Vaccines has over 25% of the float shorted, and it will take over six days for the short sellers to cover their positions, based on the average daily volume.

Obviously, there is no guarantee that these stocks will go up, but if I was short any stock selling for less than $10 a share, I wouldn’t want to waste any time covering my position, before all the other short sellers clamor in and drive the price way up.

Disclosure: Author owns TXMD. No recommendations are express or implied.

 

Corporate Stock Earnings Reports for Week 4 of November

Looking for some interesting moves in some stocks this upcoming week? Check out the companies that will be reporting earnings this week.

If earnings exceed analysts’ expectations, the stocks can shoot up. If the numbers underperform, the stock can tank. Then again, occasionally, stocks don’t move the way you would have expected.

Anyway, many traders use earnings plays for trading strategies. Also, option traders look for high implied volatility of stocks for for option selling strategies.

Here are many of the enormous number of stocks reporting earnings this week:

Monday

  • BRCD
  • CUB
  • IGT
  • JACK
  • PANW
  • TSN
  • YY
 
Tuesday
 
  • ADI
  • BURL
  • CPB
  • DLTR
  • EV
  • GME
  • HPE
  • HRL
  • HPQ
  • MDT
  • URBN
Wednesday
  • DE
  • ICL
  • SQM
Thursday
 
  • na
 
Friday
 
  • na
If you like interesting stock lists like this, be sure to check out many of the free stock lists here at WallStreetNewsNetwork.com.