3 Top Short Squeeze Stocks for August 2023

In other words, most of the times the company can just deny the rumors or allegations even if your conviction was right. This example about Valeant shows how the company kept denying rumors before eventually coming out in the open. But, before we get into the details of identifying a short squeeze, we need to understand the psychology behind shorting stocks.

• Since a short seller’s buying decision for a stock makes a stock’s price increase, this ultimately leads to other short sellers buying to exit the position.
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• It would need to post outsized active customer and revenue growth exceeding expectations.
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• Short-sellers generally are looking for overvalued investments.
• All investments involve the risk of loss and the past performance of a security or a financial product does not guarantee future results or returns.

They sold borrowed shares for $100, repurchased them for $70, returned the shares, and pocketed the difference. The Charles Schwab Corporation provides a full range of brokerage, banking and financial advisory services through its operating subsidiaries. Neither Schwab nor the products and services it offers may be registered in your jurisdiction.

What Is a Short Squeeze in Stocks?

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Still, Shay acknowledged the challenges of still elevated prices, higher interest rates and geopolitical threats, such as the risk of a government shutdown. PLUG has already announced a few such deals, and they have tended to be very lucrative. Such agreements are likely to both boost Plug’s financial results and raise PLUG stock, potentially triggering a https://www.bigshotrading.info/ in the coming weeks or months.

Affirm Q1 2024 Expectations

Tesla Inc (TSLA) is one of the most favorite go to stock for shorting and it makes for a great example. What follows next is that the positions that are short tend to capitulate. There is no doubt that shorting a stock during a decline can produce tremendous results. If you were short too early, it would have caused you some losses. For every impressive short-driven rally, there are multiple failed breakouts that leave short-squeeze traders holding the bag.

It would need to post outsized active customer and revenue growth exceeding expectations. If Affirm posts a normalized EPS loss of -$0.61, it will continue a trend of declining Short Squeeze losses through FQ4 2024. However, the FDA was concerned that exa-cel could mistakenly target genes that are unconnected with sickle cell, increasing cancer risks.

What’s a Short Squeeze and Why Does It Happen?

He said based on the personal consumption expenditures price index, another government metric, inflation for retail and food services was up only 1.3% year over year. When gas and food services are taken out, prices are a half a percent to 1% higher than a year ago. The NRF’s holiday forecast is not adjusted for inflation, which means the actual sales gains may not be as large as they seem. The regulator last week said it would establish a team of investigators to probe short-selling by foreign investment banks for illegal activity including so-called naked short-selling. As a day trader, one also needs to pay attention to the fundamentals which can potentially bring about a change in the direction of the price. The next illustration below shows how you can use this metric in your analysis.

Sometimes, a short squeeze can occur even in the midst of bad news. Therefore, at the risk of repetition, day traders must pay attention to the fundamentals. Additional information about your broker can be found by clicking here. Open to Public Investing is a wholly-owned subsidiary of Public Holdings, Inc. (“Public Holdings”). This is not an offer, solicitation of an offer, or advice to buy or sell securities or open a brokerage account in any jurisdiction where Open to the Public Investing is not registered. Securities products offered by Open to the Public Investing are not FDIC insured.

Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. A short squeeze is a high-risk situation and it may cause havoc in the market, but most don’t last forever. Identifying a short squeeze can be relatively simple—after the fact. The trick is to identify the conditions that could lead to a squeeze ahead of time, and then determine how you might want to play it (or not).