Top 10 Short Squeeze Stocks You Should Consider Buying

By ATGL

Updated November 29, 2024

Table of Contents

A short squeeze occurs when a stock with a large amount of short interest rapidly increases in price. This forces short sellers to buy shares to cover their positions, which can push prices even higher. While risky, short squeeze stocks can offer significant rewards when timed correctly. Here are ten stocks with high short interest that present opportunities for traders focused on short squeezes.

1. Upstart Holdings Inc. (NASDAQ: UPST)

Upstart is a fintech company using artificial intelligence to evaluate credit risk. Unlike traditional lenders that rely on FICO scores, Upstart’s AI-driven model assesses a borrower’s creditworthiness more comprehensively. This innovative approach has the potential to disrupt the personal loan market, which has attracted both fans and critics. Short interest remains high due to skepticism around its business model and concerns about rising interest rates impacting loan demand.

However, as more lenders embrace AI to reduce default risk and increase loan approval rates, Upstart could see strong future growth. With daily trading volume that shows increasing investor interest, Upstart’s potential for a short squeeze is supported by its value proposition. If the stock sees a sharp increase in share price, short sellers could be forced to cover their positions, driving the price higher.

2. GameStop Corp. (NYSE: GME)

GameStop is arguably the most famous short squeeze stock, following its 2021 surge that caught institutional short sellers off guard. Despite changes in its business strategy, including a greater focus on e-commerce and digital sales, GameStop remains heavily shorted. GameStop’s shift toward digital gaming, collectibles, and online sales could serve as a long-term catalyst for growth. These strategic changes aim to move the company beyond its traditional retail model, potentially driving sustained business improvements over time.

However, these same developments could also trigger future short squeezes if the company’s share price unexpectedly rises and short sellers are forced to cover their positions. As a highly speculative stock in the stock market, GameStop’s price is prone to dramatic swings. High levels of short selling continue to make it a prime candidate for future squeezes.

3. Trupanion Inc. (NASDAQ: TRUP)

Trupanion is a leader in pet health insurance, a growing sector as pet ownership rises and people look for comprehensive medical coverage for their pets. The company’s business model provides recurring revenue through monthly premiums, which offers the potential for steady growth. However, the stock has faced significant short interest due to concerns about rising competition and cost structures.

Despite these concerns, Trupanion’s expansion into new markets and its strong brand recognition in the pet industry could drive future growth. If the company posts positive earnings or announces new partnerships, short sellers may be forced to cover their positions, driving the stock price higher.

4. AMC Entertainment Holdings Inc. (NYSE: AMC)

AMC has been another retail trading phenomenon, largely due to its potential for massive short squeezes. After rebounding from pandemic-related struggles, AMC has diversified its business beyond movie theaters. The company’s foray into areas such as digital content, non-fungible tokens (NFTs), and its involvement in streaming platforms has captured investor attention.

While the traditional theater model still faces challenges, AMC’s diversification strategy could boost its financial performance, catching short sellers off guard. If these new ventures prove successful, another short squeeze could push prices dramatically higher.

5. B. Riley Financial Inc. (NASDAQ: RILY)

B. Riley Financial operates in investment banking, advisory services, and asset management. It offers a range of financial services to companies and high-net-worth individuals, making it a diversified player in the market. The stock has attracted short sellers due to concerns over economic conditions affecting its advisory business and fluctuating asset values.

However, B. Riley’s broad revenue streams and stable financials make it a valuable company within the financial services sector. If the firm posts stronger-than-expected earnings or capitalizes on market volatility, an upward movement in share price could trigger a squeeze as short sellers cover their positions.

6. Arbor Realty Trust Inc. (NYSE: ABR)

Arbor Realty Trust is a real estate investment trust (REIT) that focuses on originating and servicing multifamily and commercial real estate loans. Short sellers have targeted the stock over concerns about the commercial real estate market, particularly in the face of rising interest rates.

However, Arbor has a solid history of delivering stable income to shareholders through dividends and maintains a strong presence in the multifamily housing sector. If the company manages to maintain strong earnings and dividends in a challenging interest rate environment, short sellers may be forced to cover, leading to a squeeze.

7. Medical Properties Trust Inc. (NYSE: MPW)

Medical Properties Trust is another REIT, specializing in owning hospitals and healthcare facilities globally. This sector benefits from the essential nature of healthcare services, making it more resilient during economic downturns. Despite this, short interest has risen due to concerns about debt levels and profitability.

The company’s strategy of expanding its portfolio and securing long-term leases with healthcare providers could mitigate these risks. Medical Properties Trust has significant stock market exposure, and if it continues to manage its debt effectively and maintain its profitability, its share price could rise. As daily trading volume increases, short sellers might be forced to unwind their positions, leading to a potential short squeeze.

8. Lemonade Inc. (NYSE: LMND)

Lemonade is a digital-first insurance company that uses AI and behavioral economics to streamline the insurance application and claims process. It offers insurance products for renters, homeowners, and pets. The company has been heavily shorted due to concerns about its profitability and competition from established insurers.

However, Lemonade’s disruptive technology and growing customer base in underserved insurance markets offer long-term growth potential. If the company can demonstrate improving margins or expand into new product lines, this could create a scenario where short sellers scramble to cover their positions, leading to a price surge.

9. Children’s Place Inc. (NASDAQ: PLCE)

Children’s Place is a specialty retailer focused on children’s apparel and accessories. Like many retailers, the company has faced challenges from declining foot traffic and the broader shift toward e-commerce. These concerns have led to significant short interest in the stock.

Despite these headwinds, Children’s Place has made strides in its digital transformation, increasing its e-commerce sales and restructuring its store footprint. If the company can continue to grow its online presence and improve profitability, it may trigger a short squeeze as investors realize the stock has been oversold.

10. CompoSecure Inc. (NASDAQ: CMPO)

CompoSecure designs and manufactures premium payment cards and provides digital security solutions for financial institutions. The stock has attracted short sellers due to concerns about competition and market saturation in the payment card space.

However, with increasing demand for secure financial products and services, CompoSecure is well-positioned to benefit from ongoing trends in digital security. Any positive news, such as major contract wins or technological innovations, could lead to a rapid price increase, forcing short sellers to cover their positions.

Choose From Our Short Squeeze Stock List and Start Making Profits

Investing in short squeeze stocks can be rewarding, but it also comes with heightened risks due to volatility. Be sure to perform your own research, stay informed about market conditions, and consider consulting a financial advisor before making any trades. To better understand how short squeezes work and how to capitalize on them, consider reading our short squeeze guide.

At Above the Green Line, we specialize in providing data-driven investment strategies, helping you navigate high-risk opportunities like short squeezes. Our systematic approach eliminates emotion from your trading decisions, offering a clear path to success. For additional insights and trading strategies, explore our membership options and enhance your ability to capitalize on the next short squeeze opportunity.